Senate Rural and Regional Affairs and Transport Legislation Committee, , 1:14:03 to 1:27:31
Officials explain the decision to defer full export cost recovery by one year to provide certainty during global instability. The session concludes with an overview of financial supports for farmers, including the Farm Household Allowance and RIC loans.
Topics: Export cost recovery, Drought and disaster support, Agricultural productivity
Speakers: Matt Lowe, Senator Glenn Sterle, Senator Paul Scarr, Miss Victoria Anderson, Sarah Burr, Tina Hutchison
>> Uh, I can start to senator. Yes. And Miss Hutchinson might be able to
>> Well, that was a great start. The handball straight away. I should learn
that better. Well, I I can say definitely as part of um considerations early on when we um were going and and trying to understand and comprehend the impact of the Middle East crisis was at the time that the return to full cost recovery in our export uh services was going to be implemented from one July this year and the government took a decision to defer that by a year simply because um it was a very uncertain time for industry at the time. As you said, everybody was a bit panicky. no one no one really knew if we were going to get a crop in the ground and and we thought rather than having that uncertainty and worry um we the government took a decision to defer that. So I don't know if Miss Hutch I think that's the answer but Miss Hutchinson can add if she wants
>> Thank you Miss Hutcherson you want to contribute that.
>> Thanks very much uh Tina Hutcherson deputy secretary I think the secretary
>> Perfect. Um so how does the one-year deferral provide certainty while farmers are dealing with fuel, fertilizer and freight pressures?
Well, I think Senator, it it is just one less cost that's um going to be applied at this time. So, um uh obviously there there will be return but to full cost recovery, but at this time um people know what the the prices are going to be for export uh certification for the next 12 months without any especially at a time when as we've all noted there's serious fluctuations in other input costs for the industry.
>> Yeah. Yeah, it is. We're living in uncertain times. So beyond and my last transer questions, there's only three of them, but beyond securing fuel and fertilizer, what practical support is available for farmers and producers who are under financial pressure because of higher import costs, seasonal conditions, and uncertainty from the Middle East conflict.
>> So um I will start and and I think Mr. Low or his colleagues might be able to add more. So obviously we do have a range of programs in place um for for those doing it very tough. The farm household allowance is the key income support program uh that's available from the government. That's um policies owned by us but delivered by uh uh social services or services Australia is it >> services >> services Australia on our behalf. >> Um we also have a range of other things such as um the regional investment corporation loans um and a range of programs and grants that are available through um through our our farm support sort of area. But Mr. Low can can run through. He was turning his screen to me, but I'm going to let him read his own screen. [laughter]
>> So, as the as the secretary mentioned, chair, um the regional investment corporation, important um um source of support with concessional loans. um the rural financial counseling service. Yeah. Um which is a wellestablished and well recognized and um and relied upon service by farmers um to engage in in in support and advice around um financial matters. Um there's the farm management deposit scheme as well which we've picked up in previous estimates with Senator Scarr for example which is also something where um farmers can draw down upon those deposits in times of need as well whether it's drought whether it's other um other shocks that um that farmers experience as well just as a as a as a number of supports.
>> No that that that's good thanks Mr. Lo and why is continuity of that service important during a period of conflict related cost pressures?
um though uh ultimately um it's about food security. Um chair, it's um for us thinking about and and that's why we're we're working on a food security strategy. Ultimately, food security is something that underpins the security of this nation. Um it underpins the security of this region. Um so um we recognize that the agriculture sector is subject to a range of different shocks that are challenging to prepare for. It's not that the sector doesn't prepare for those. Um such as drought um a Middle East conflict is is less foreseeable.
>> Yes. They got enough to worry about as it is the poor devils, haven't they? >> Y that's right. So if we can ease any of the pain, this is this is great news. My last one, how do you get that message? How does DAFF get that message out to farmers and farmer groups that all this stuff's going on, it's available should you need it?
>> Yeah. So, um, one of the things we're we're engaged with the sector constantly um and and across the across the organization, but what is I think really important and something that the minister uh established for example during the Middle East crisis and has continued was a um it was an industry roundt. So at times >> it was meeting um I think fortnightly
>> started started weekly
>> started weekly secretary and um so that brought together industry stakeholders from across Australia and where they could receive a briefing from the minister the secretary um we had um Australian Institute of Petroleum at the NFF and fertilizer Australia as well. So just that dissemination of information and what industry told us was that they use that so peak peak industry organizations then use that briefing to disseminate out to to their members. So farmers on the ground um in a lot of cases. So trying to just get that information flow happening and keep that information flow happening was a key focus for us.
>> Yeah. And I've just done I've just done I've done the normal Senate estimates thing there. I've lied. It's not me last question. I just want to go back. No, but I got to go back on this and I can't stress this enough to whoever's listening. The power of consultation with industry and and roundts of el out myself the magnificent opportunity for industry to get into the minds of the bureaucracy and the bureaucracy to hear from industry to say that we're not opposed to each other. You got your expertise here, we've got ours and if you listen to us and we work with you, it's amazing what we can achieve together and we're not draining the
agree um chair and >> um and and some of the these challenges are significant and I think government working on its own industry working on its own is not going to achieve as much as both working together.
>> No, you're spot on. So these still not be my last one but I'm getting there. So with the roundts are they still going >> monthly. What are they?
>> More more on a monthly time step as obviously the Middle East conflict is ongoing and a lot of those pressures as the secretary outlined in her opening statement still exist. >> Um the the need for additional information to the sector if you like has has reduced in terms of kind of the frequency. Um, but it is important from our perspective that we still retain that mechanism.
>> And from the intern, and this is my last one, but from the internals of your department, how's that assisted your people to actually realize that these grumpy farmers, they got a reason why they're grumpy? >> The reason they're grumpy is because no one's listening because they've got the fix. >> Yeah. >> So, how's that worked out with your staff and, you know, through the >> through the um channels?
>> Yeah. I think it's I think what's happened is that regular communication has just given us a greater appreciation of what is happening on the ground and ultimately policy needs to be responsive to the issues that uh the sector is experiencing um and it's given us I guess that greater kind of fidelity um and also ability to be more responsive feed that into government whole of government processes or um I guess calibrate what we're doing within DAFF um and with our minister.
>> Well, I tell you what, in times of despair and the shocking situation the crazy world's in at the moment, that's a real shining light. Congratulations to all the department and the initiatives and to the government. But that's what we want to see and continue. No matter who's in government is how we need to operate. >> Okay, I'm finished.
just follows on naturally I think. And um >> uh good to see you in such a good mood chair as well this morning. >> all sunshine and light. So,
>> it won't be you. Sorry.
>> No, that's right. Uh, so if I can ask some further questions and and congratulations to everyone involved in the hard work involved in relation to the fertilizer security facility. Uh, obviously as the chair said there was huge pressure and concern and obviously department's done a lot of work. Can I just ask you Africa? Uh I got a particular interest in Africa um through our wonderful diaspora communities. Which um which countries in particular supplied Jura?
>> It was uh I'll just double check. It was Nigeria.
>> Nigeria. What advice, if any, did the department give EFA on which company should take
ourselves DAFF and D of the department of industry science and resources >> um did advise um EFA on companies um if you like to kind of um sign up to the facility um I mentioned some of the criteria before that we use
>> so which which companies did you
recommend? [snorts] Um as it currently stands we recommended companies that comprise um
>> so there were three companies that you mentioned that received
>> three companies.
>> So each of those were recommended for
particip
in addition to those three
>> there were so and and the point I was about to make um and Ms. there will have the exact number but the number of companies that we recommended to EFA um for the facility represented 96% of URA imports over the last 3 years
>> So how many how many companies? Um so in
addition to the three companies that have um signed up to participate in the um facility, we also recommended um on the uh 6th of May we recommended we referred a further six companies. Um those companies were Nutrian um Summit was included in that group because they came after Institute and um CSBP uh Kosh um Amoropa, Fertolobe and CBH. And on the 18th of September, we uh referred a further company and that was MNCO.
>> Okay. Thank you. Uh when you were compiling that list of companies, uh were you relying on Fertilizer Australia's list of recommended importers or would was this a result of your own independent identification?
>> Uh it was a combination. Um so there was yes advice received from um industry um including through fertilizer Australia. Um there was um uh conversations that we held with Daiser um as our um policy joint lead partner um on um the policy side of the facility um and um our understanding um of market dynamics. So um uh yeah, a combination of um engagements that informed our referrals um including um companies that may have reached out directly to Export Finance Australia just seeking further information that were then um we were advised of those company names um before
that on 4 May, Fertilizer Australia wrote to the minister warning that underwriting initech pivot fertilizers and CSBP could distort prices and cause other importers to delay or reconsider shipments. So I mean obviously there are consequences for this sort of intervention, right? Um what advice did the department give the minister in response to the concerns raised by
of that um correspondence. Um in terms of um our advice um we were quite keen to ensure that there were a number of um participants in the facility um in addition to the the first two that were signed. So I believe at that time it was just Instatech and CSBP but we did have the subsequent Summit Fertilizers um uh join the facility after that date. And um we've um seen continued engagement through Export Finance Australia with um those additional companies that I listed. um about um future participation.
>> But notwithstanding that those other companies apart from the three didn't have haven't had an opportunity to participate in the facility, have they?
>> They have. Um the companies who haven't chosen to if you like kind of participate in the facility. Um so they've been given the opportunity. Um but there are terms associated with that. It's not a subsidy. It's a price risk sharing mechanism and companies need to make commercial decisions of their own about whether they um decide to participate in the facility or not. So um if you like the offer was made senator to that long list of companies but only three have chosen or elected to participate in the facility. Now, we don't want to, I guess, speculate or judge why companies haven't signed up, but but that the mere fact is that there's a longer list that we've afforded the opportunity.