A group of 50 NSW farmers travelled to Parliament House in Canberra on Tuesday to call for the government's draft laws - which would end the AWB monopoly on bulk wheat exports - to be scrapped.

Tempers flared during the inquiry as the farmers made their feelings plain, cheering, jeering and interjecting until they were warned they risked being thrown out.

The tension spread to the parliamentary committee, where the Nationals clashed with their coalition partner over wheat export policy.

Nationals senator Barnaby Joyce clashed with Liberal senator Bill Heffernan, who also sits on the inquiry's committee, inside and outside the hearing.

Senator Heffernan accused Senator Joyce of talking "bullshit" during the inquiry.

Senator Joyce hit back.

"We have the ridiculous proposition unfortunately that our coalition colleagues are going to support the Labor party in dismantling one of the greatest advantages for regional people who have always been strong supporters, I thought, of coalition politics," he said.

Senator Heffernan later tried to attend Tuesday's lunch-time press conference with the farmers but was asked to leave by Senator Joyce.

"Look serious, Barnaby, look serious," Senator Heffernan called out as Senator Joyce walked up to a journalist.

Hugo Boss is the latest in a line of fashion labels, including Abercrombie & Fitch, Timberland and H&M, to reject mulesing.

The controversial practice involves slicing the skin from a sheep's rear end to prevent flystrike.

German-based Hugo Boss, one of the world's largest fashion houses, has released a statement declaring it "dissociates itself from mulesing because it contravenes our corporate values".

The company has given Australian farmers until 2010 to stop mulesing or the company will boycott the wool.

And Hugo Boss has taken the boycott one step further, rejecting the use of clips as an alternative to mulesing.

Veterinarian Dr Norm Blackman, manager of the Australian industry's Wool and Sheep Industry Taskforce, said it was the decision to boycott the use of clips which posed the greatest threat to the industry.

The clips are attached to the sheep's skin wrinkles which drop off over time. Farmers had been looking to the clips to partially replace mulesing.

"This is the first real attempt to target the clips," Dr Blackman said.

He said the aim of animal rights groups was "to shut down our sheep industry".

Dr Blackman said he had long expected animal rights groups, particularly People for the Ethical Treatment of Animals (PETA), would seek to discredit alternatives to mulesing as part of their hostility to the wool industry.

It was unfortunate Hugo Boss had been subjected to misinformation from activists. Using clips was not a form of mulesing, he said.

Dr Blackman said the Hugo Boss boycott was "very disappointing ... the symbolic impact does worry us".

However the boycott would not cripple the wool industry because Hugo Boss had given a deadline of 2010, and the industry had already committed to stop mulesing by that time.

And any fashion label seeking a boycott could buy their wool from the 23 per cent of Australian wool farms which did not use mulesing, Dr Blackman said.

West Australian farmer Max Watts, who runs up to 12,500 sheep on his farm south-east of Perth, said he was not too concerned about the Hugo Boss boycott because the industry should stick by its commitment to stop mulesing in 2010.

He said the wool industry should listen to consumers and retailers.

The Premier Paul Lennon has requested urgent advice from the state's drought taskforce and he's expected to meet the Primary Industries Minister, David Llewellyn, this week.

Mr Lennon says the government is looking at short-term, practical support to help farmers until a more sustainable water supply can be delivered.

"That will involve helping them to try and keep stock on their land through these terrible drought circumstances and help them with some of the day- to-day bills that they have to continue to pay, even though there's no money coming in to them because of lack of water, which means of course you can't farm your land."

-abc.net.au

The Federal Government had already instructed the Australian Competition and Consumer Commission (ACCC) to investigate any anti-competitive conduct in the fertiliser industry.

But this morning the Coalition used its numbers to set up the Senate inquiry into fertiliser pricing and marketing.

The inquiry will be chaired by Liberal Senator Bill Heffernan who says it is needed to protect rural Australia.

"When there is a shed full of super back in November worth about $780 a tonne and he is told by the agent 'mate I can't quote you a price nor give you a delivery' on the super that is sitting there in shed - we have been had," he said.

"The price has gone up $400 a tonne in the meantime, now you can have some."

-abc.net.au

Finance Minister Lindsay Tanner said the legislation - which was rushed through the lower house on its first full sitting day - was urgent because funds allocated for assistance would otherwise run dry at the end of this month.

The bill gives effect to policies the government has already announced.

It expands exceptional circumstances (EC) drought relief assistance by $251.2 million and provides $255.7 million to the horse industry following the outbreak of horse flu last August.

This bill requires immediate passage as the administered appropriations provided to the Department of Agriculture, Fisheries and Forestry have been exhausted," Mr Tanner told the lower house.

"At the current rate of expenditure, the department will run out of appropriations by the end of February 2008."

A second appropriation bill added $440.1 million to support primary producers in EC-declared regions and $7.8 million to support businesses with up to 100 employees that are dependent on patronage from farmers in EC-declared regions.

It also moved to reimburse $97.2 million to the states and territories for funds they spent on a national effort to eradicate equine influenza, most of which it plans to recover from the horse industry.

Neil Schillabeer, from the Lower Lakes and Coorong Infrastructure Group, says dropping water levels and strong winds mean many are no longer able to pump water from the lakes.

The group is pushing for a pipeline to be built from Tailem Bend to the Narrung Peninsula to supply water for domestic and stock purposes.

Mr Schillabeer says in the meantime farmers have to buy water in.

"They've employed contractors to cart water in from a standpipe off the mains at Meningie and people who are using considerable amounts of water are finding that it's costing them up to $1000 a day to maintain their water supplies," he said.

South Australian Premier Mike Rann visited the region yesterday, along with Water Security Minister Karlene Maywald and Agriculture Minister Rory McEwen.

Mr Schillabeer says he used the meeting to push for support for the pipeline project, which could cost up to $40 million.

"The discussions that we had with the Premier and the Minister indicated to us that we've got a long way to go in terms of working out how this can be funded," he said.

-abc.net.au

Federal Finance Minister Lindsay Tanner has announced almost $650 million in cuts to Government spending.

The cuts include around $115 million in drought assistance promised by the previous government, and $150 million from the Growing Regions Program to develop infrastructure in regional areas.

National Party leader Warren Truss says the Federal Government has got its priorities wrong.

"He should not be taking it out on drought-stricken farmers," he said.

"They're not causing inflation, many of those people are facing the costs of more than seven years without worthwhile rainfall.

"I know there's been some good rain in some places, but many people are still suffering from drought. These are the wrong people to be attacking with budget cutbacks."

Mr Truss says the Government should be looking elsewhere for savings.

"What I want is an assurance from the Labor Government that no farmers will have their entitlements cut back as a result of this measure," he said.

"Farmers have got a right to some support through these difficult times.

"The Labor Government has the biggest budget surplus in our nation's history - they do not need to be attacking the most vulnerable people in the community."

Yesterday, new Federal Agriculture Minister Tony Burke said he would consider paying incentives to farmers to encourage them to change their practices to address climate change.

Mr Burke also hinted at research grants worth around $75 million for farm organisations, including more support for genetically-modified crops able to withstand drought.

Association president Jock Laurie says he wants more information about the plan.

"We need to sit down and get a lot more detail," he said.

"But one of the things the Government has said prior to the election and after the election in any discussions that we have had with them is that they have a very strong focus on climate change.

"They want to make sure that a lot of the programs that they have got in place in relation to research and development, education, and now they are talking about drought relief, is very much focused on climate change and focused on the long-term future of the industry and making sure that it can remain viable well into the future."

Victorian Premier John Brumby has assured the public that the decision means farmers will be able to choose the nature of their crops.

"Farmers and consumers will get choice," he said. "Farmers will have their choice as to whether they wish to grow a GM canola or whether they wish to grow a non-GM canola.

"They will be joining something like 10 million farmers around the world in 22 countries who grow and produce GM products."

And he says environmental benefits will flow from the decision to allow GM canola crops to be grown.

"The benefit of GM canola is that it uses far less pesticide than does traditional canola. And the reason for that is that these GM products, you only have to spray your crop once when it's growing, instead of often two or three, or sometimes four times under traditional approaches.

Meanwhile in Sydney, NSW Primary Industries Minister Ian Macdonald agreed it was high time the four-year moratorium came to an end.

"If this expert panel and the minister approves the planting of a genetically modified crop in New South Wales, then it can proceed, but only under those circumstances," he said.

Victoria's decision was based on the findings of a report into the economic impact of GM crops, chaired by the state's chief scientist, Sir Gustav Nossal.

He is confident GM and non-GM crops can be appropriately segregated.

"It is absolutely true that no one can guarantee 0.0000 per cent, and therefore there have to be thresholds, and the generally accepted international threshold is 0.9 per cent. That is to say less than one per cent," he said.

"I'm very confident that the industry can maintain that segregation."

National Farmers Federation president David Crombie says the group welcomes the decision.

"We are feeling our way forward. I think the advantage of lifting the moratoria is that at least we can actually see what's happening, and we can actually prepare ourselves for change," he said.

"I mean, in the final analysis, if markets tell us that they don't want biotechnology products, then obviously it won't be commercial to do it, so it won't proceed.

"So I think that it really will be market-driven, but I think we have our heads in the sand if we leave moratoria in place."

The decision to allow farmers to grow genetically modified canola has been criticised by some farmers and environmental groups who say most people believe GM food is dangerous.

But a group of eight agricultural scientists across Australia released a statement backing the move, saying every major science and health organisation in the world endorsed the safety of GM crops to human health and the environment.

Farmers in Victoria and NSW would now be able to choose what type of canola crop they grew, putting them on a level playing field with overseas farmers and able to enjoy environmental benefits, Victorian Premier John Brumby said.

NSW Primary Industries Minister Ian Macdonald said farmers had been missing out on export opportunities to the US and Canada because of the failure to adopt GM canola.

"Market conditions have changed since the act was introduced, with GM canola now responsible for 70 per cent of the world's trade," he said in a statement.

Queensland allows GM crops and Tasmania is currently reviewing its ban.

The South Australian government is considering an expert report on genetically modified (GM) crops with a current ban due to expire in April next year. A moratorium on GM crops, including canola, has been in place in SA since 2004.

The rest of the states and territories retain bans.

Fisheries Minister Eric Abetz says if re-elected the Government will introduce six initiatives to assist the industry.

They include a $10 million initiative to increase farmed seafood production and $4 million to boost sales of eco-friendly ocean produce.

Senator Abetz says it is important to maximise the industry's productivity.

"The seafood sector is worth $2.2 billion to the Australian economy. It employs literally thousands of people right around the Australian coastline," he said.

"[It is] very vital to our regional economies and communities and with this investment we see a very bright future."

-abc.com.au

The latest inflation figures have fuelled speculation of another interest rate rise early next month.

Mr Vaile says the drought has hit 65 per cent of Australia's agricultural areas and primary producers are carrying high levels of debt.

He says he hopes the Reserve Bank will take the drought into account when it makes its decision on Melbourne Cup day.

"What will an interest rate rise do to their structural circumstances - will it be the straw that breaks the camel's back and push a lot of those farming families over the edge?" he said.

He says it could spell the end for farms and other rural businesses.

"I just hope that they do take into consideration those people in the community across Australia that are not directly sharing in the prosperity that exists in this country today, that could be detrimentally affected at this time by an interest rate rise," he said.

Campaigning in the central-west New South Wales seat of Calare, Mr Vaile also announced that the Coalition had agreed to change its rural medical infrastructure fund, removing the population limit on towns that can apply.

The change means that more communities will be able to apply for grants worth a maximum of $1 million.

-abc.com.au

At the foodbowl of Shepparton in northern Victoria, farmers are going to extraordinary lengths to stay on the land.

If the drought is waging war on farmers, orchardist Ross Costa, for one, is fighting back.

On his 60 hectare orchard near Shepparton this third generation Italian farmer has assembled an arsenal to fend off just about everything nature can throw at him.

There is the hail cannon that uses a sonic boom to crush the ice so it falls as softly as snow, and the five frost fans he put in after losing $2 million-worth of fruit to the cold last year.

But Mr Costa's most precious weapon against the drought is his bore.

"That's liquid gold you can hear - that's water coming out of the ground and we switch the motors on and it irrigates the orchard of course," he said.

The bore means that so far this year Mr Costa has managed to avoid buying in any water, but he knows a lot of his neighbours have not been as lucky.

"I found water right on the property here which is good water - it's only 600 parts to a million salt," he said.

"People who have dug a bore in have had to bury them because the salt content's just too high in this area, and that hurts because the borer still wants to be paid.

"He wants his $2,000 a hole to put in the ground and the next minute you've got to bury it."

Mr Costa is also making the most of the water he does use.

He has planted pumpkins next to his fruit trees so each drop is used twice.

Workers balanced on a motorised, moving platform are pulling off 70 per cent of the young fruit that is starting to appear, so that what is left can grow as large as possible.

Mr Costa says that otherwise, he may end up with tiny fruit that that the supermarkets will not buy.

Taking 70 per cent of the fruit off at this stage because of the water situation is a risky strategy because if a frost comes, farmers can lose the remaining 30 per cent.

"If you get a hailstorm, you lose the other bit, so you put things into measure to protect yourself," he said.

"You try and cover all bases, but if a severe hailstorm comes through, I mean a big hailstorm, you wouldn't stop it - those hail cannons will not stop it.

"And if a severe frost comes through this morning at minus five degrees, frost fans won't do it."

Despite the risks, Mr Costa says he has not given any serious thought to taking up the Federal Government's offer of $150,000 to walk away.

"What - $150,000 for what? Three frost fans cost you that - that's just ridiculous," he said.

Many of the 200 farmers participating in the Parliament House protest are irrigators whose water allocations have been slashed under the national water plan.

The federal parliament passed laws in August that handed the commonwealth control over water allocations for irrigators along the drought-stricken basin.

The laws, which are backed by all Murray Basin states except Victoria, also provide for the establishment of the Murray-Darling Basin Authority to manage water resources.

Murray-Darling Water Crisis Management Council chairman Ken Trewin said the plan would induce a man-made disaster across the basin that would force up food prices long into the future.

"Taking this water out of production will wipe $28 billion off agriculture and associated industries, or 2.9 per cent off the economy," Mr Trewin said.

He urged farmers to abstain from voting if the laws were upheld.

"It's really important to get the message through to the treasurer of the day irrespective of which political party that might be," Mr Trewin told the crowd.

"The drought has reached unprecedented proportions and the social and economic impacts are beyond comprehension.

"That's the message to get to these politicians and the federal members, if they don't listen, don't vote."

Mildura district grape grower John Argaro said the federal government had failed to consult irrigators about the laws.

He said if the federal government did not listen to their concerns farmers' would have no option but to abstain from voting at the federal election.

"We've got to (abstain from voting)," he said.

"We'll go in and cross our name off the role.

"At the end of the day you cannot just push us aside and we'll go away, it's got to the point where something needs to be done straight away."

Mr Argaro said irrigators in the Mildura district already had suffered a 35 per cent cut to their water allocations.

He said by June next year farmers would have lost 60 per cent of their allocations.

"Sixty per cent of the water gone, dead, going back to nature," he said.

"If that's what they (government) want then so be it as long as they know they have killed a whole community."

Robinvale grape grower Luigi Ingaliso said he would protest by not repaying money borrowed to fund extra water allocations.

"I don't think we will abstain from voting but we will abstain from paying our water bills," he said.

"I've got a son that in two or three years time has to make a decision about staying on the farm.

"What is he going to do? What am I going to do? Go on the dole?"

The council has called for immediate consultation between governments, irrigation groups and farmers to re-work the national water plan.

The SAFF has invited members of both the major political parties to join the tour to hear the views of farmers, the rural community and business leaders on the drought's impact.

It comes as South Australian farmers, like others in many parts of Australia, warn that below average rainfall again this winter is threatening the viability of many on the land.

The SAFF has welcomed extra funding from the federal government for drought relief but has been at odds with the state government over its handling of the issue.

It said many of the state government's recent announcements related to measures already in train.

"What we are facing is a potential national rural crisis," SAFF president Wayne Cornish said ahead of the tour.

"This is bigger than tinkering with exceptional circumstances (measures), we are looking at massive structural change across the country.

The Federal Government's $700 million extension of drought relief announced yesterday includes exit grants for farmers to leave the land.

Mr Howard told Channel 9 the exit packages are generous, but most people will stay on their farms.

"Many won't take that up, it's a matter for them, it's a matter of providing sufficient inducement for people who are inclined to do it because some people do need to leave the land," he said.

"Even when the drought breaks - and it will break ... even when it does break for some people it's just not viable to remain."

Farmers federations from both New South Wales and Queensland have welcomed the top-up to the initial $3 billion drought assistance package, saying it shows both sides of the government recognise the disastrous impact of the country's current dry spell.

The new funding also widens the criteria for some farmers who did not fall under the original Exceptional Circumstances funding bracket, to receive much-needed assistance.

-abc.com.au

Mr Howard says the new money announced today is on top of the $430 million he announced last week.

He says it gives farmers more access to drought funding by easing the income and assets tests and it also provides help for irrigators and boosts support for rural-dependent small businesses.

Mr Howard says the funding recognises that some farmers will have to give up their properties, but enhances the dignity of farmers who are forced to leave their land.

Mr Howard says the financial help is needed and angrily dismissed the suggestion that it is timed to win rural votes just before the election.

"You'd have to be incredibly cynical to think this was some kind of stage managed thing - have you been to a rural area and had a look at what its really like, have you been to the Murray-Darling basin?" he said.

"You'll know that every dollar of this assistance is needed and anybody who thinks that this is a pre-election ploy is pathetic."

"These people are in a desperate situation and they're the heart and soul of our rural communities and we've got to help them."

The National Farmers Federation's Ben Fargher says the help is badly needed.

"We have moved out of a serious drought into a crisis in many regions around our country," he said.

"Today the Australian Government has moved to protect the productive base and farm families with a package worth over $700 million, we obviously welcome that announcement."

-abc.com.au

The warning of price rises came as the US Department of Agriculture downgraded its prediction of the Australian wheat crop harvest, which, coupled with poor weather in Canada, Europe and Argentina, will hurt the global wheat supply.

NSW Primary Industries Minister Ian Macdonald said the nature of the drought, which is harshest through NSW's all-important central west grain belt, put the state at "crisis point".

"We believe that if we don't get rain within the next week to two weeks we will have substantial crop failure in NSW," he told reporters in Sydney.

"A crop failure of this magnitude would have a huge impact on the prices of basic foodstuffs right across the state and rolling into Christmas."

The US Department of Agriculture (USDA) has downgraded its forecasts for the Australian wheat crop due to be harvested in most regions by Christmas.

The USDA cut its estimate of Australia's wheat crop to 21 million tonnes, well below last month's estimate of 23 million tonnes.

Poor weather in Canada, Europe and Argentina also has hurt the global supply of wheat.

The Premier says the 2007 Dry Season Assistance Scheme would be available immediately and farmers could apply for grants of $8,000 to help minimise the impact of the drought.

Wheatbelt farmer Tony Sudlow says although any assistance is welcome, the process of applying for grants is too complex.

"Well I'll believe it when I see it and I'd like to see what strings are attached, because usually there's a fair bit of hype going about money, and when it comes down to getting it, it's a lot harder to get than they say," he said.

-abc.com.au

-Andrew West
　

A $250 MILLION plan to pump more than 18 billion litres of recycled water into the Hawkesbury-Nepean river could resuscitate the agricultural area known as Sydney's food bowl.

About 50 million litres of sewage a day would be cleaned and recycled in a new plant to be built by 2009 and used to top up the river system during dry spells.

NSW Water Utilities Minister Nathan Rees will sign a contract, in the next fortnight, with the Deerubbin Water Futures Consortium to establish the recycling plant at St Marys.

At present, water from Warragamba Dam is used to periodically flush the rivers to keep them healthy.

"Instead of plundering the drinking water supply at Warragamba Dam for these environmental flows, we will have another source," Mr Rees told The Sun-Herald.

"At the moment, when the choice is between drinking water and river health, we have had to choose drinking water."

Mr Rees, considered one of the Government's rising stars, also hopes such a big-ticket recycling project will stem criticism of its desalination plant, now twice as big as originally planned.

In June, Premier Morris Iemma announced that the desalination plant, costing $1.76 billion, would process 250 megalitres of sea water a day, rather than the originally forecast 125 megalitres.

Now the Government is trying to make up ground, revealing a range of smaller scale recycling projects, which it hopes might also keep the market gardens and small farms of western Sydney suppled with water.

"We will have a cleaner Hawkesbury," Mr Rees said. "Along that stretch of river is the food bowl of Sydney and, like all rivers across Australia, the Hawkesbury has been under severe stress from drought."

Total Environment Centre director Jeff Angel said the St Marys plant was "a good, small step on the road to Sydney having a water recycling grid".

"But it will still be cheaper to desalinate water and that will become the preferred option of Treasury," Mr Angel said.

Source: The Sun-Herald

-smh.com.au

Victorian farmers are facing a record season with a bumper $3 billion crop predicted this year, experts say.

Victorian Agriculture Minister Joe Helper said the Department of Primary Industries' TOPCROP network found that about two million hectares of wheat had been sown across the state.

"These predictions give me cause to be cautiously optimistic about the season's outlook," Mr Helper said.

"A number of factors have contributed, including that because of drought, many farmers have sown winter crops in areas where they previously would have kept livestock."

Mr Helper said expanding sowing areas had paid off for many grain growers, as climatic conditions proved favourable.

"In addition, world grain prices for nearly all crops are reaching close to record highs this year," Mr Helper said.

TOPCROP's results include predictions for wheat, barley, oats, canola, field peas, lentils, chickpeas, faba beans, lupins, triticale and vetch.

"We are also hopeful that farmers have enough cash flow after the drought for fertiliser to help crops reach their full potential," Mr Helper said.

About 5.6 million tonnes of wheat is predicted this season.

"This (predicted figure) is much greater than the current Victoria record for an annual crop which was four million tonnes, produced in 1983," Mr Helper said.

-AAP-ninemsn.com.au

Grain handler and marketer GrainCorp Ltd has been awarded a new licence by South Australia's Essential Services Commission to export barley in bulk from South Australia.

GrainCorp said it would be able to commence barley exports immediately.

The South Australian government has passed legislation deregulating the export barley market.

About two million tonnes of barley are exported from South Australia each year.

Previously, ABB Grain Ltd was the only company with a licence to export barley from South Australia.

GrainCorp managing director Tom Keene said the grant of the licence was an important step for the company, allowing further expansion in South Australia.

"This is an exciting opportunity for GrainCorp, and we will compete strongly to buy export barley this year," Mr Keene said.

"Our international customers require a consistent supply of grain, and we are now able to supply this from all the major barley regions of Australia."

Mr Keene said several companies would now be competing to buy barley in South Australia, which would benefit farmers.

"Given the last few seasons, growers will be looking for strong prices and that's what contestable markets can provide," Mr Keene said.

GrainCorp said that with the new export licence, it would be offering South Australian growers a full range of barley pools and payment options this year.

GrainCorp shares were 18 cents higher at $13.03. ABB Grain was three cents lower at $9.03.

-AAP-ninemsn.com.au

Food and grocery makers are planning further price hikes.

The industry said rising costs, including petrol and labour, had forced its hand.

"Consumers should expect price increases in the future across a range of food and grocery categories as it is becoming increasingly difficult for growers and manufacturers to contain costs," Food and Grocery Council chief executive Dick Wells said.

He added higher food and grocery prices were an "unpopular reality that people will have to expect if the supply is to be maintained".

Prices for fresh food regularly fluctuated due to the season and the weather, but other costs were increasing significantly.

"Costs for fuel, fertiliser, labour and other inputs have increased substantially, but the fact is that farmers and manufacturers along the supply chain have been absorbing these costs for a long time," he said.

"At some point this becomes unsustainable and to remain viable companies have no choice but to seek to pass some of the costs on.

"The reality is that for decades we have seen access to an increasingly healthy and varied supply of food and grocery at very competitive prices, while the proportion of household income spent on food has been steadily decreasing."

The council's warning for consumers to brace for price increases comes after Labor said it would ask the consumer watchdog to monitor grocery prices to address buyer perceptions they are being ripped off.

The government says Labor's pledge to increase the Australian Competition and Consumer Commission's power is a pre-election stunt, but the Australian Consumers' Association backs the plan.

Opposition Leader Kevin Rudd also said he would introduce legislation into parliament that would prevent Australia's two grocery chain giants engaging in price gouging and predatory pricing.

The government says the best way to keep grocery prices down was to keep the inflation rate low.

-AAP-ninemsn.com.au

Australian families could be paying up to 25 per cent more for a litre of milk within the next six months, along with similar jumps in the cost of other dairy products.

National Foods Limited, the country's largest processor of drinking milk and dairy products, said wholesale prices for milk and dairy foods would likely rise between 20 to 25 per cent in the half-year period.

Individual retailers will decide how much of the increase is passed on to consumers, the company said.

National Foods managing director Ashley Waugh said that while there was growing demand for milk products, supply had shrunk because of the drought.

"With rising prices for international dairy commodities, combined with reduced availability of milk due to the drought, milk is now much more expensive at the farm gate and has reached unprecedented highs," Mr Waugh said.

"We also estimate that the drought has reduced the available annual milk supply in Australia by more than one billion litres, and this is having a significant effect on milk available to support export demand.

"Furthermore, the milk being produced is costing farmers more because stockfeed prices have risen."

A higher price for raw milk meant increases for milk, cheese and dairy products, he said.

-AAP-ninemsn.com.au

Environmental groups have urged authorities to charge NSW farmers who have allegedly begun chopping down trees on their properties in protest at new state laws.

The small numbers of farmers allegedly involved showed exactly why environmental laws were required, the groups said.

On Monday, farmers from the NSW Farmers Association said they were in a no-win situation if they were forced to buy out their perpetual land leases from the state government and then face new environmental restrictions.

The association has challenged a plan by the state's Department of Lands to convert about 11,700 leases, comprising about three million hectares of crown land.

The Total Environment Centre, which comprises a number of environment groups, described the alleged tree-chopping actions as self-destructive and urged the NSW government not to give in to environmental vandalism and blackmail.

The groups said they would also support community demands for even stronger tree protection laws as a result of these alleged actions.

"In response to media reports that irresponsible landholders have chopped down 4,000 trees and will double efforts every day, (NSW) Environment Minister Phil Koperberg said on ABC Radio this morning that he would prefer to talk with the organisers in preference to taking strong legal action," the centre's director Geoff Angel said in a statement.

"The NSW Farmers Association has failed to condemn the vandalism and industry lobby groups like the Australian Beef Association are actively supporting it.

"This minority of farmers are destroying their own properties and are a perfect example of why we need the tree protection laws.

"They are also destroying the reputation of the majority of farmers and their associations who claim farmers are environmentally responsible."

Mr Angel said the NSW and Queensland governments both promised to enforce and retain the laws at recent state elections and the groups expected them to do just that.

"Environment groups have vowed to investigate all legal options to protect the environment and make the general community aware and active on this issue," he said.

-AAP-ninemsn.com.au

The southern part of the Murray-Darling Basin has seen some rainfall, but not enough to stave off zero water allocations.

Mr Howard's grave warning in April of no water for irrigators from July 1 in Australia's food bowl has been realised, with soaring fruit and vegetable prices expected to follow.

"It's been biblical rains all along the coast - we've just had a mere fraction of that," says Ted Hatty, a mixed cropping farmer in the NSW Riverina.

"The crops are holding on all right at the moment, I think, but they do need a drink.

"You can see there's dust coming off the paddocks," says Mr Hatty, who has abandoned plans for a rice crop later in the year.

A farmer group leader says the cut-off combined with droughts in other growing regions is a threat to the nation's food security.

"Unless we get widespread flood rains we are not going to get our water storages filled up so this situation could go on quite seriously into next year," AusVeg chairman Michael Bad***** says.

"Basically, Australia's in big danger of not being able to feed itself."

Most growers in the southern basin, which spans NSW, Victoria and South Australia, have already been operating without much irrigated water.

"We're all just bloody tired. We're tired of not having any water and trying to plan how to deal without water," says Cheryl Rix, general manager of Western Murray Irrigation in the Sunraysia district.

-Wendy Frew Environment Reporter
　

THE members of a controversial Top End farming taskforce chaired by Liberal senator Bill Heffernan are expected to be announced today as the group holds its first meeting in Canberra.

The Federal Government's $10 billion national water plan includes an investigation into the potential for large-scale agriculture in northern Australia.

Senator Heffernan, who is believed to have recruited the Cape York indigenous leader Noel Pearson and the businessman Lachlan Murdoch, has said the north could become the food bowl of Australia and Asia.

However, conservationists are unhappy with the taskforce's narrow terms of reference. They say only 1 per cent of northern Australia is useful for farming.

The manager of WWF Australia's Northern Landscapes, Stuart Blanch, said the terms of reference should be widened to identify development options that support traditional owners' aspirations, create sustainable livelihoods and protect environmental assets.

"Intensive farming will only ever occur on a very small proportion of the north, perhaps less than 1 per cent of the area," Dr Blanch said.

"But other development and land use options, such as indigenous land management, conservation, fishing, mining, liquefied natural gas and tourism, already occur right across the north."

Scientists and environmentalists are turning to the carbon market to help protect northern Australia's wild country.

They claim that with an estimated 30 per cent of the continent's carbon stored in northern Australia's savannas and soils, tapping into the booming international carbon market could be a way of protecting the land, creating jobs and providing the continent with a massive carbon buffer.

"Northern Australia holds about 30 per cent of the carbon stored in Australia's plants and soils. Clearing the tropical savannas would release massive amounts of carbon into the atmosphere, adding significantly to Australia's contribution to the build-up of greenhouse gases," Dr Blanch said.

-smh.com.au

　

-Kelly Burke Consumer Affairs Reporter
　

FRUIT and vegetables may triple in price because of scarcity caused by the extreme weather, farmers have warned.

Michael Bad*****, the chairman of Ausveg, which represents vegetable and potato growers, said the country was on the brink of a "serious food security situation", with very little of the recent rain falling in catchments of the Murray-Darling basin, which produces 40 per cent of the nation's food.

The NSW Minister for Water, Phil Koperberg, has said the critical water needs of industry in the Murray Valley will be met for July.

However, George Warne, the general manager of Murray Irrigation which provides irrigation water to almost a million hectares of farmland north of the Murray River, said it was "now almost inevitable" farmers would start the season this Sunday with a zero water allocation.

"It's going to have a huge impact on dairy, potatoes, tomatoes, rice and corn," he said. "People saw what happened when Queensland lost its banana crop with Cyclone Larry … well, we're now looking at widespread shortages and price rises for a whole range [of produce]."

The NSW Greens have demanded the Government warn households to prepare for a lean winter and spring. The predicted zero water allocation would place at risk table grapes, apples, pears, stone fruit, lemons, mandarins, grapefruit, tomatoes, lettuce, salad vegetables and dairy, the Greens' Consumer Affairs spokesman, Dr John Kaye, said.

"Warning households of impending price rises will help people prepare budgets and make financial provisions for rising food prices," he said.

Meanwhile, the NSW Chamber of Fruit and Vegetable Industries has warned that heavy rain in North Queensland is threatening tomato and green leafy vegetable supply.

"If this rain doesn't stop, the price of tomatoes will go through the roof," the chamber's chief executive, Colin Gray, said. But while prices might soar, Sydney would be relatively well off, he said, because of easy access to imported produce.

-smh.com.au

　

A key rainfall indicator hit a 13-month high as rain continued to fall across much of the east coast and significant inland areas of Queensland, NSW and Victoria.

The Southern Oscillation Index rose to 12.3, its highest point since May 2006.

Meteorologists use the index to predict the onset of El Nino, or drought, and also the arrival of La Nina, or heavy rain.

Bureau of Meteorology spokesman Simon Louis said the index would need to stay above 10 for about a month before a La Nina event could be declared.

"What we are looking for is the Southern Oscillation Index to stay persistently above 10," Mr Louis said.

Four days ago the index reached 10.1 and it has stayed above 10 since then.

While Mr Louis said the index was encouraging for farmers as well as city dwellers desperate to escape water restrictions, the long-term indicator was still only neutral.

"The Southern Oscillation Index is only a short-term calculation," he said.

"It may just be a reflection of the weather we have been experiencing lately."

The Bureau of Meteorology will release a formal analysis of the rainfall situation on Wednesday and is likely to give its strongest suggestion yet that Australia is about to experience a La Nina event.

A new method of calculating the declaration of La Nina is being developed by the bureau but it is likely to be at least two months before any announcement will be made.

Mr Louis said the onset of La Nina would not automatically break drought crippling much of southern Australia.

"The problem with prolonged dry periods is that the ground is so dry so it just soaks up any rain and water does not go any further.

"We need a season of soaking rains."

-AAP-smh.com.au

Strong global prices for wheat have prompted wheat exporter AWB Ltd to lift its forecast of the prices that it expects to get for grain delivered into the 2007/08 national wheat pool.

National pool general manger David Johnson said the increase in the 2007/08 forecast estimated pool returns (EPRs) was supported by continuing strong world cash prices for wheat.

"The ongoing strength of world wheat cash prices is primarily driven by further delays in the US Hard Red Winter wheat harvest," Mr Johnson said.

"The appreciation of the Australian dollar continues to partially offset the rise in world wheat cash prices for the 2007/08 national pool estimated pool returns."

AWB said that it had lifted its forecast EPR for the 2007/08 national pool for APW grade wheat and APDR durum by $5.00 a tonne to a range of $255 to $265 per tonne.

The EPRs for the 2005/06 and 2006/07 national pools remain unchanged.

The benchmark APW grade 2005/06 EPR remains at $192 per tonne and durum grade APDR at $235.50 per tonne.

The 2006/07 APW EPR remains at $234.50 per tonne and durum grade APDR is $258 per tonne.

Mr Johnson said the 2005/06 and 2006/07 national pools remain well advanced in their price programs and were therefore less susceptible to international price movements.

AWB shares were 12 cents higher at $4.22 on Monday.

-AAP-ninemsn.com.au