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16 Nov 2009 WEEKLY BULLETIN November 16, 2009

GROCERY PRICE DEBATE FOCUSED SOLELY ON COMPETITION
Last week’s debate on the increasing cost of groceries has again raised the issue of the duopoly that exists with the two major supermarkets Coles and Woolworths. The commentary led to a call for more competition in the marketplace which would bring about a reduction in the price of groceries. The obvious response from the retailers is that cost increases for the retailer are the result of the fact they are paying more for these food items from suppliers. While this may or not be the case, what is certain is that the 41.3% increase in food prices at the cash register over the past ten years is not reflected in the financial returns to farmers. QFF has said in the past that being more competitive is a good thing but it is imperative that all sectors of the supply chain continue to be economically sustainable. The search for mechanisms to lower the weekly grocery bill may lead to even lower returns for farmers. There are a number of ways that food might become cheaper on the shelf. A retailer could reduce the price they currently pay for goods and services, they could import cheaper product or of course they could lower their business profit margin. If Government is to intervene to encourage competition, it really is hard to see how they should do it in such a complex industry. The recent ACCC investigation into this issue encourages the expansion of the existing horticulture marketing code. The Australian Food and Grocery Council reports that its industry contributes $100 billion dollars a year to the Australian economy and agricultural production is just over $37 billion dollars. Government policy makers should consider very carefully how they intend to encourage further competition so as to ensure their policies do not have significant adverse impacts on the rest of the value chain.

SUSTAINABLE DIVERSION LIMITS FOR THE MURRAY DARLING BASIN PLAN
The Murray Darling Basin Authority (MDBA) has released a paper which examines the issues that will be considered in setting sustainable diversion limits (SDLs) for the Basin Plan, a draft of which is expected to be released mid 2010. Sustainable diversion limits are ‘enforceable limits on the quantities of surface water and groundwater that can be taken from the Basin water resources’ under the Basin Plan. Issues addressed in the paper include the setting of these limits for catchments and groundwater areas that extend across state boundaries and that the SDLs will not apply to environmental flow provisions and entitlements as these would not compromise environmental outcomes of the Basin Plan. The SDLs are to include limits on water interception activities such as the trapping of overland flows. Hydrological modelling and economic and social assessments are being undertaken to assess the SDLs. Comments on the paper are sought by 18th December and the MDBA is planning two workshops in Canberra to provide government agencies and other stakeholders the opportunity to discuss the paper and other aspects of the preparation of the basin Plan. A copy of the paper is available at www.mdba.gov.au/services/publications.

TRAVESTON DAM REJECTED
Environment Minister Peter Garrett has made a proposed decision to reject the Traveston Crossing Dam project, after deciding the impacts on threatened species would be too great. Mr Garrett last week said "After carefully considering all the information put before me and advice from my Department, it is very clear to me that the Traveston Crossing Dam cannot go ahead without unacceptable impacts on matters of national environmental significance". The decision has been based on the science that shows that the project would have serious and irreversible effects on nationally listed species such as the Australian lungfish, the Mary River turtle, and the Mary River cod. QFF has never taken a pro or anti dam position in the past, simply pointing out that if approved the dam should be both economically and environmentally sustainable. With the dam now not proceeding a number of “knock on” implications arise. The resulting further stress on the already scarce agricultural water allocations in South East Queensland and the types of environmental mitigation strategies imposed on farming in the Mary Valley are just a few to consider. Interestingly Mr Garrett also says that irrespective of his final decision for the proposal the already outlined species protection measures should be implemented including; rehabilitation of riparian corridors; improved cattle fencing around sensitive habitat; and finalisation of recovery plans for the Australian lungfish.

AGRICULTURE EXCLUDED FROM THE CPRS
Hot off the presses this week was the news that the Federal Government has agreed to an opposition amendment to exclude agriculture from the CPRS. This in the end was really the only possible scenario if the CPRS was to proceed. The uncertainties around including agricultural emissions in a trading scheme are far too great for the market to account for and understand. While on the surface of it the proposed exclusions may deal with the issue it will also serve to hide a number of issues. QFF has been saying since the beginning of this debate that whether agriculture is covered or not makes little difference to our members. The truth of the matter remains that costs of critical farm inputs will still rise as the result of the proposed CPRS and farmers will have very little opportunity to mitigate against these costs. It was, however, very pleasing to see that over the last several months almost all agricultural representative bodies have spoken as one in calling for this outcome and politically there was little other option. Confirmation of agricultures’ removal from the scheme still requires coalition and Government party room support and the scheme is due to be voted upon in the Senate next week.

CONSTRUCTED WETLANDS TO HELP TREAT FARM RUN-OFF
Minister for Primary Industries, Fisheries and Rural and Regional Queensland, Tim Mulherin, has visited the state's first farm to apply the concepts of urban stormwater management to treat farm run-off. The Minister said sugar producer Don Myers at Homebush, south of Mackay, recently finished construction of an on-farm wetland to replicate natural wetland functions. "Both natural and constructed wetlands play an important role in farm management because they slow water velocity, reduce erosion and filter nutrients and sediments," Mr Mulherin said.
This outcome is an on-farm example of the type of work QFF and our members have being doing for some time now with the Queensland Wetlands Program, in producing guidance material which supports voluntary Farm Management Systems (FMS) and promote best practice options for constructing wetlands. Discussion on the development of the Wetland Management Handbook: Farm Management Systems (FMS) guidelines have gone on for years and it is pleasing to see them finally released. The science on the use of wetlands and detention basins on farms to mitigate nutrient and sediment loss is compelling and the more policy and incentive drivers that go towards encouraging this type of management practice the better. The Wetland Management Handbook is available from www.epa.qld.gov.au/wetlandinfo.

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