CORRECTED VERSION

OUTER SUBURBAN/INTERFACE SERVICES AND DEVELOPMENT COMMITTEE

Inquiry into sustainable development of agribusiness in outer suburban Melbourne

Lilydale— 27 October 2009

Members

MrN. Elasmar / MrD. Hodgett
MsD. Green
MsR. Buchanan / MrD. Nardella
MrM. Guy / MrG. Seitz
MsC. Hartland / MrK. Smith
Chair: MrG. Seitz
Deputy Chair: MrK. Smith

Staff

Executive Officer: MrS. Coley
Research Officer: MrK. Delaney
Witness
Cherry/Berry Grower
Mr Steve Chapman, (affirmed).


The CHAIR— I call Steve Chapman.

MrCHAPMAN— My mailing address is 21Parker Road, Silvan.

The CHAIR— Thank you. You should be familiar by now with how we operate. There will be 20minutes for you and 10 for us.

MrCHAPMAN— Thanks. I am the fourth generation in my family to farm in the Silvan district. My family has been farming for over 100years, so it would be fair to say that I have a strong interest in business and environmental sustainability.

Water: security of water is the key to business survival and future investment in our industry. The high price of land and crop protection make a modern, highdensity orchard a significant capital investment. Total orchard establishment costs of around $100000 per hectare are becoming the standard. Growers cannot afford to risk capital in the future without security of water supply.

Accurate statistical data for the Yarra Valley is not generally available, partially due to the fact that we are an interface shire that is not regarded as a major production area. DPI’s main focus in this district appears to be rabbit and blackberry control— which, incidentally, they are not doing that well at.

Due to the lack of local industry statistics I am happy to share data regarding the true value of water from our farm in Silvan: from 1 megalitre of water our farm provides one fulltime job; from 1megalitre of water our farm provides an average economic return approaching $100000.

While this data may be best practice in our industry, the tree fruit industry, at present, it will become standard practice within a few years. Other horticultural industries in the shire are getting better returns for their water. The 4800megalitres, or approximate, of recycled water could potentially give the Yarra Valley 4000fulltime jobs, using that data, and boost the economy by $400million. So the recycled water project has a lot of potential for the region.

Crop protection: it has become a necessary investment for business and environmental sustainability. Protective nets reduce water use by around 30per cent. They can reduce conflict with near neighbours by reducing the need for scaring devices or shooting. The need for a planning permit means that anybody can object, whether they are nearby or not.

With apple growing, the requirement for a planning permit means that growers need to apply for a permit before the trees are planted, possibly some years before the net structure is required to be erected. It is no longer viable to grow apples without protective nets.

I will just expand a little bit about the earlier question from the Chair about the colour of the nets. Clearly there is no significant difference between black and white nets; however, increasing technology means that growers will want to use any type of net or plastic structure that will lead to an increase in yield or improve the quality or enable them to reduce the spray inputs. It is interesting to note that in the UK 80per cent of berries and cherries are grown under plastic protective structures. Obviously there are differences in their climate and their labour laws.

Another problem for us with protective nets is that planning laws currently only permit 60per cent of the land area to be covered. What are we supposed to do with the other 40per cent? Crop protection structures will increase and continue to diversify to enable farmers to reduce risk and increase productivity. Supermarkets and the public demand fresh, blemishfree produce.

The green wedge: most growers support the theory behind green wedge. We do not want to sell out to housing development. We want to maintain or improve our biodiversity and river health. We want to live in the rural area we grew up in. However, we do need infrastructure, we need large pack houses where growers working cooperatively can achieve efficiencies that enable us to compete in a global world. A modern cherry grader costs around $1million, which is beyond the reach of most individual growers. We need farmers markets, tourism and the ability to value add on farm. The wine industry is allowed to sell products grown off site at farm shops; why cannot other horticultural industries?

Labelling: fortunately the Yarra Valley has a reputation for being clean and green. It is also local to 4million people who know that Yarra Valley produce has not travelled across the world. Organic certification is an opportunity for small producers. Unfortunately the term ‘organic’ has many misconceptions, one being that it is the most environmentally sustainable system. This is not necessarily so. Many Yarra Valley growers use growing practices that have less impact on the environment than an organic certified system. The system is based on science and not historical practices.

There is currently no opportunity to market produce grown to environmental best practice.

The future: to look toward the future we need to look at the competitive advantage that growers in the Yarra Valley have over other districts. The obvious factors are: proximity to markets and population, and the availability of labour, materials and water. Horticultural industries that require high labour inputs and those that have highly perishable or niche markets should have a strong future. If planning laws do not undermine current efficiencies, it is difficult to see other areas out compete flowers, nurseries and berries and other soft fruits.

Lack of investment in R and D by government and their apparent disinterest in food security and safety in the future are of concern. We need our neighbours and our government to recognise our value as food producers. That is all I have written.

The CHAIR— Thank you very much. You are saying that packaging and sorting is worth a huge amount, $1million. Recently the committee was in the United States and I continued with some further studies there. I noticed that all the farm gate sales had big signs that read ‘Washed cherries’ because in Michigan in particular they had a glut of cherries this season and they had to dump quite a lot of them. In your case what standards do the supermarkets here— Safeway, Coles, Aldi— set in terms of packaging? If you have a cooperative machine, do they all demand a different type of packaging? Do they supply their own packaging or do you buy what they require? Or how does it work?

MrCHAPMAN— I suppose it is fair to say that most of the chain stores like to differentiate their packaging to some degree, to have their own competitive advantage. There are certainly diverse packaging requirements. It is something you need— to have a big grader that is adaptable, from packing a 200gram punnet to a 10kilogram box and to the type of labelling that is required.

It may have ‘best before’ dates or may be specific to certain chain stores. The quality parameters are fairly consistent across cherries. The requirement for sizing in particular— whether they are 24millimetre or 26millimetre cherries— has added a lot of capital requirements to graders, because it is really that aspect more than any others that drives the cost of packing equipment.

MsHARTLAND— I was interested in your comment about a communal packing facility— I think that is what you were talking about. How would you see that working? You are thinking that could be shared amongst a number of farmers but what are the things that stop you being able to do that?

MrCHAPMAN— There currently are a few larger businesses that pack cherries, in particular, on behalf of a lot of growers. Currently if we wanted to build a large packing facility on our farm my understanding is it would not be allowed under the green wedge planning laws, so that sort of restricts our business a little. We do not have a specific desire to do that, but certainly where there is an established business that packs for a number of growers the planning requirements sort of promote the product going more to that business.

But there are cooperatives. There are a couple of cooperatives in the shire that work very successfully together and do need distribution centres or packing facilities. To remain competitive in the future I think that will become more common.

MsHARTLAND— All of the fruit that you grow would have to be manually picked? You could not have any kind of automated picking, because of the damage it might do to the fruit?

MrCHAPMAN— It is interesting. Our cherry growers had a presentation at a meeting yesterday from Washington State University, and with the cost of labour and availability of labour, their industry over there is certainly looking at developing specific genetics that will enable cherries in particular to be harvested with machines. I think that is a long way off. Certainly in the next 20years it is difficult to see that anything other than hand labour will be the mainstay of the industry.

MsHARTLAND— Thanks.

MrHODGETT— Steve, you made a comment about unblemished fruit produce. I did not catch whether you said it was the consumer or the actual supermarkets that were dictating the quality and presentation of the product?

MrCHAPMAN— I suppose it is a bit of both but ultimately it is the consumer that provides the supermarket with the feedback when apples with marks on them are the last ones left or apples with lower colour are the ones that do not sell very well. Ultimately, I think it is the consumer who has to take the responsibility for those decisions. Certainly, the supermarkets are sometimes a little insistent about specifications, but I think in recent years they have developed some flexibility in their requirements. With cherries if we get a wet year they might expand the amount of cracks that can be in the produce. There is some flexibility there. Basically, most of our secondgrade fruit we need to sell either directly to the public or through some processing. It is of pretty low value and the percentage of the fruit that we grow that is second grade without protective nets is unmanageable mostly.

MrHODGETT— What percentage would be second grade that is sold direct to the public?

MrCHAPMAN— I would estimate around 30per cent. That would be pretty standard certainly across apples and berries. That would be about right.

MrHODGETT— Steve, just on the righttofarm issue: if you pick a time period over the last 10years, do you think the problems are increasing, decreasing or stable in your region?

MrCHAPMAN— I think the issues have changed a little. There are still problems with bird scaring devices near neighbours and bedandbreakfasts. Those issues are not going to go away. But as growers have adopted more nets I think they have reduced, but then the concern has shifted to the visual amenity. That then involves not just the neighbours nearby; it can involve whoever is in the landscape.

MrHODGETT— I understand. Thank you very much.

MrNARDELLA— Whose rule is it that only 60per cent of the land can be covered?

MrCHAPMAN— My understanding is that it is in the state government planning legislation.

MrNARDELLA— When we were here with our previous inquiry we had a look at the netting and other stuff. I do not think that was raised with us.

MrCHAPMAN— I know through the Centre for Agriculture and Business we have had some input into the draft green wedge management, and that was one issue that was raised. Claudette, who was here before, can probably qualify that better than I can.

MrNARDELLA— We might need to have a look at that. The righttofarm stuff is interesting. This is a perennial question I ask of every farmer in the green wedge, or interface council: what is your view about rural lot excisions? I think in the main they are a major part of the problem.

MrCHAPMAN— Yes, I think they are, but as Ian Ada stated before, historically we have not had any subdivisions in this shire for a long time. They are an historical fact, and they are hard to change. Our shire tends to have smaller lots— 8hectares or 20acres is pretty standard— so neighbours are pretty close. That puts a demand on the farmer to really produce a lot, and it is more intensive industry rather than some of the other——

MrNARDELLA— Is it farmer opposing farmer on this, or is it some scene change person or a multimillionaire who has moved in and wants a lifestyle?

MrCHAPMAN— In my opinion bedandbreakfasts create a fair bit of conflict. They do not need a permit. They can set up alongside an existing farm, and all of a sudden you have five people from the city wanting a quiet night out and the spray vat starts at dawn or goes into the night and significant conflict arises.

I would think that most of the people who move into the area can pretty readily see what they are moving in alongside. They do not always know the issues, but I think the shire has done a reasonable job of addressing the issues through the pamphlet and making new people aware of what the farming issues are.

MrNARDELLA— The bed and breakfasts you have talked about, are they springing up? What is happening with them? Why do they not need a permit?

MrCHAPMAN— My understanding is that they do not need a permit for under five people. In our case, where we put up some nets and we had some objections from a neighbour, I know it was not because it obstructed his view. It was because his intent was to renovate his office in the future and let it out for bedandbreakfast.