❓ A WA parliamentary question addresses the butter shortage in Western Australia due to drought in the eastern states and explores opportunities for local dairy farmers to expand production. The Minister acknowledges the shortage and potential for WA dairy industry growth, but highlights price and production volume constraints.
AnsweredQoN 1005Legislative Council
QuestionView source ↗
BUTTER SHORTAGE
I refer to the shortage of butter in Western Australia due to the culling of dairy herds in the eastern states because of the drought and the collapse of the Murray-Darling River system. (1) What is the current impact of the butter shortage in Western Australia? (2) Is this shortage expected to continue for some years into the future? (3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE
I refer to the shortage of butter in Western Australia due to the culling of dairy herds in the eastern states because of the drought and the collapse of the Murray-Darling River system. (1) What is the current impact of the butter shortage in Western Australia? (2) Is this shortage expected to continue for some years into the future? (3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE
AnswerView source ↗
I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(1) What is the current impact of the butter shortage in Western Australia? (2) Is this shortage expected to continue for some years into the future? (3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(2) Is this shortage expected to continue for some years into the future? (3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(1) What is the current impact of the butter shortage in Western Australia? (2) Is this shortage expected to continue for some years into the future? (3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(2) Is this shortage expected to continue for some years into the future? (3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(3) Depending on the answer to (2), and recognising practical constraints and the need for increased infrastructure and available pasture, is the government exploring opportunities for Western Australian dairy farmers to expand to meet this need; if so, what are these options; and, if not, why not? Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
Hon KIM CHANCE replied: I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
I thank the member for some notice of this question. (1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(1) I have seen one media report and I have heard some anecdotal information. However, I have not had a formal briefing from the Department of Agriculture and Food yet. Those anecdotal and media references have pointed to a shortage of butter to the point of an incapacity to supply butter to commercial users. As yet, I have not heard of a shortage at the supermarket supply level. I am aware of absolute unavailability of commercial supplies to those commercial users - for example, patisseries, bakeries etc - to the extent that one of them has said that the only option he has is to go to the supermarket and buy domestic supplies. Hon Brian Ellis’ preamble is quite accurate. As far as I am aware, the shortage of supply is directly linked to the shortage of irrigation water, particularly in Victoria, but throughout the eastern states generally. (2) I do not see this fixing itself in a hurry. One of the things that is happening in the Murray-Darling system in particular, but in irrigation areas on the east coast generally, is that dairy farmers in Victoria have been forced to cull herds due to the water shortage. That, in itself, does not mean that those dairy farmers will not go back and try to replace those herds. However, the shortage of water means that as water falls due for reallocation, and because we are now on tradeable water entitlements, it is far more likely that the available water use will be taken up by people who have the potential to make the highest economic benefit per megalitre of water. That will not be dairy farmers, who rank among the lowest efficiency users of irrigation water. (3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
(3) Hon Brian Ellis will be aware that, since deregulation, our own industry has contracted, but not as a result of a shortage of water. Indeed, we have adequate water in our established dairy area to considerably increase production. Again, anecdotally, but by experts, I have been told by top-end farmers that we have the capacity to double our dairy production at least, without increasing our dairy production area by a single hectare. In other words, we have production efficiency capacities that, at a price, will allow us to significantly increase our dairy production. Let me just say, though, that we are such a small part of the total Australian production that we will not make a huge difference to Sydney and Melbourne’s industry. Western Australia’s total production share of the Australian dairy industry is only about four per cent. It is a very small industry here. However, we have some significant capacity to make life a lot better for Western Australian dairy farmers. That is the first issue we should be considering. Everything is a function of price. We can lift production, but only if the price signals are right. We are now enjoying in the dairy industry the highest prices since deregulation. However, they are still in the order of only the mid-30c per litre - somewhere between 34c and 37c depending on the producer. Bearing in mind that prior to deregulation in 2000 a domestic entitlement milk producer was getting over 50c a litre, it is still not a terribly high price, but it is much better than what they have been getting. If we see prices moving upwards of 40c a litre and dairy farmers get a sense of confidence that those prices can be maintained, we will see an increase. For Western Australia to become an effective exporter of dairy material, however, we need to aim for a minimum production of 800 million litres per annum, and our production is well under 400 million litres. We would have to more than double our industry before we could say we were even at the entry level of being a serious dairy exporting state.
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