REPORT ON PROCEEDINGS BEFORE PORTFOLIO COMMITTEE NO. 4 - INDUSTRY LONG-TERM SUSTAINABILITY OF THE DAIRY INDUSTRY IN NEW SOUTH WALES CORRECTED At Macquarie Room, Parliament House, Sydney, on Wednesday 3 February 2021 The Committee met at 9:30. PRESENT The Hon. Mark Banasiak (Chair) The Hon. Wes Fang The Hon. Emma Hurst (Deputy Chair) The Hon. Peter Primrose The Hon. Mick Veitch PRESENT VIA VIDEOCONFERENCE The Hon. Lou Amato The Hon. Catherine Cusack Wednesday, 3 February 2021 Legislative Council - CORRECTED Page 1 The CHAIR: Welcome to the second hearing of the Portfolio Committee No. 4 - Industry inquiry into the long-term sustainability of the dairy industry in New South Wales. Before I commence, I acknowledge the Gadigal people, who are the traditional custodians of this land. I also pay my respect to the Elders past, present and emerging of the Eora nation, and extend that respect to other Aboriginal people present. Today we will be hearing from a number of key stakeholders, including representatives from the Department of Primary Industries, the NSW Fresh Milk and Dairy Advocate, a member of the NSW Dairy Industry Advisory Panel and representatives from the Australian Competition and Consumer Commission. While we have most witnesses with us in person, some will be appearing via videoconference today. I thank everyone for making the time to give evidence to this inquiry. Before we commence I will make some brief comments about the procedures for today's hearing. Today's hearing is being broadcast live via the Parliament's website. A transcript of today's hearing will be placed on the Committee's website when it becomes available. In accordance with the broadcasting guidelines, media representatives are reminded that they must take responsibility for what they publish about the Committee's proceedings. The guidelines for the broadcast of proceedings are available from the secretariat. While parliamentary privilege applies to witnesses giving evidence today, it does not apply to what witnesses say outside of their evidence at the hearing. Therefore, I urge witnesses to be careful about comments they may make to the media or to others after they complete their evidence. All witnesses have a right to procedural fairness according to the procedural fairness resolution adopted by the House in 2018. These rules have been provided to witnesses and are available from the secretariat. If witnesses are unable to answer a question today and want more time to respond they can take a question on notice. Written answers to questions taken on notice are to be provided within 21 days. If a witness wishes to hand up documents they should do so through the Committee staff. In terms of the audibility of the hearing today, I remind both Committee members and witnesses to speak into the microphones. As we have a number of witnesses in person and via videoconference, it may be helpful to identify who questions are directed to and who is speaking. For those with hearing difficulties who are present in the room today, please note that the room is fitted with induction loops compatible with hearing aid systems that have telecoil receivers. I now welcome our first witnesses. PORTFOLIO COMMITTEE NO. 4 - INDUSTRY Wednesday, 3 February 2021 Legislative Council - CORRECTED Page 2 ALEXANDER RUSSELL, Director Intensive Livestock, NSW Department of Primary Industries, before the Committee via videoconference, sworn and examined IAN ZANDSTRA, NSW Fresh Milk and Dairy Advocate, sworn and examined SERGIO (YANI) GARCIA, Professor of Dairy Science, member of the NSW Dairy Industry Advisory Panel, University of Sydney and Director Dairy Research Foundation, affirmed and examined KATE LORIMER-WARD, Deputy Director General Agriculture, NSW Department of Primary Industries, affirmed and examined SCOTT HANSEN, Director General, NSW Department of Primary Industries, sworn and examined The CHAIR: Would any of you like to make a short opening statement? Mr HANSEN: Thank you, Chair. The Committee has our submission to the inquiry. In the interests of getting as much ground covered as we can this morning, we might just jump straight into questions. The Hon. MICK VEITCH: I am happy to take up that offer, as you can imagine. I have a series of questions for a number of the panel members, but I want to start off focusing a bit on the Australian Competition and Consumer Commission [ACCC] review. Mr Hansen, has that review provided any assistance in identifying gaps in service delivery to the dairy industry in New South Wales? Has the department drawn any information that they did not already have? Mr HANSEN: I might throw to Mr Zandstra in a moment in terms of what information and outcomes from that ACCC review has been of use in constructing the dairy action plan and some of the pieces in amongst that, particularly around that forward confidence piece for the industry. I am conscious that you have the ACCC on this afternoon in terms of some of their findings and where they are up to in their current review. But Mr Zandstra might like to make some comments. Mr ZANDSTRA: The review was about two years ago and it was very comprehensive; it was a tremendous overview of the dairy industry. I think the main focus of the review was the mandatory code, or the need for a mandatory code. I cannot recall any specific passages that actually referred to service or lack of service to the industry in New South Wales. The Hon. MICK VEITCH: Mr Zandstra, prior to the last election the then Minister for Primary Industries, Niall Blair, committed to forming a crisis task force for dairy. I want to know: Did that happen, has that happened or is it in the process of happening? Mr ZANDSTRA: I am not too familiar with Niall Blair's comments but I know from that it led to the thought of a dairy advocate and the results of the lobbying by industry and especially by advocacy groups. I could assume that if there was a crisis review committee, it might have evolved into the advocate's role and the forming of the Dairy Industry Advisory Panel to develop the dairy plan, at least to discuss the nature of the state of the New South Wales dairy industry. As far as a crisis committee, I do not think anything such as that was called was formed. Mr HANSEN: I will to add Mr Zandstra's comments that the Dairy Industry Advisory Panel was the evolution of those original discussions around some form of committee to look at the crisis that was presenting in the dairy industry at the time. It started in 2019, met monthly for a period of time under the stewardship and oversight of Mr Zandstra. They were the key authors and contributors to the dairy industry action plan, which has been formed up in consultation with industry, it has been out for consultation with industry and frames up the forward set of actions. The Hon. MICK VEITCH: Mr Hansen, since last time this Committee conducted its inquiry into the dairy industry, that inquiry recommended that this one be set up and established. There were also a number of issues raised. Have you had a chance to look at submissions to this inquiry? Are you confident that the dairy industry has moved from where it was when the first public inquiry into dairy a couple of years ago took place? Has there been positive movement? Mr HANSEN: I think it is worth reflecting on what some of the differences between 2018 and now are. Probably the most significant—and if you remember back in 2018 we were talking about where the industry found itself at that point in time, you will recall that we talked about all the data we had from our Dairy Farm Monitor Project, as well as feed from the industry was a rapidly escalating input cost to their business that was having an impact on profitability. Obviously, from 2018 things only got worse and in 2019. Over the course of 2020 we started to see things turn in terms of seasonal conditions changing and change in some of those input costs—feed being the single biggest input cost that they were having to wear. So when we think about some of the major PORTFOLIO COMMITTEE NO. 4 - INDUSTRY Wednesday, 3 February 2021 Legislative Council - CORRECTED Page 3 changes between then and now, we have seen seasonal conditions improve, which, in response to that we have seen production start to improve, and we have seen the value of livestock significantly improve. At the same time, over that period since 2018—because when we were talking then there was discussion around the potential for a code of conduct for the industry in terms of its dealing with retails, which is now a mandatory code of conduct that has been put in place by the Federal Government. I might ask Mr Zandstra if he wants to reflect on the consultations he has had with the industry over the past couple of months. There is a confidence that was not there in 2018. That confidence has driven both on what they are seeing in terms of current prices and, I dare say, seasonal conditions are even better now than what they were when this Committee last met and held public hearings before the Christmas break and shutdown. We have seen a continuation of those good seasonal prices, some of the highest prices for milk on record being paid and an increase in the production volumes. That is all painting a much more positive picture than what we saw in 2018, in 2019 and what you would even have seen in some of the submissions early on into this inquiry.