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Coal Seam Gas


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GENERAL PURPOSE STANDING
COMMITTEE No. 5 27 MONDAY 31 OCTOBER 2011

PATRICK WILLIAM NEAL, Member, New South Wales Farmers Associations Dairy Committee, sworn and examined:

CHAIR: I note Mr Adrian Drury is not at the table. Prior to opening for questions from the Committee would you like to make an opening statement?

Mr NEAL: Yes please. I would like to thank the Committee for this chance to give evidence today.

By way of background, the New South Wales Farmers Associations Dairy Committee is a fully autonomous body which falls under the NSW Farmers brand.

For those of us who produce fresh milk for the people of New South Wales, there are serious concerns about the potential impact of coal seam gas.

The New South Wales dairy industry is largely centred on the coastal areas of New South Wales to the north and south of Sydney. Both these areas are covered by petroleum exploration licences and, outside NSW Farmers, those communities have no source of independent information about what this means for their future.

I want to focus on what it means for me as a dairy farmer if coal seam gas exploration or production were to proceed on my property. I am a larger than normal producer in the area. I run about 500 cows. We produce around 10,000 litres of milk each day.

To do that, I have to comply with some fairly serious quality assurance requirements.

Firstly, I have to be licensed by the New South Wales Food Authority under the Food Regulation 2010.

Those regulations require that the producers of dairy products must be able to mitigate any potential hazards to food safety and must have the ability to trace any input to the production system to identify the source of contamination incidents.

The penalties for contravening the dairy food safety scheme are serious with fines up to $275,000 for a corporation and the withdrawal of licences which can shut down a business.

For me, I cannot guarantee I will meet those obligations where I have unknown workers from coal seam gas companies coming on to my land to conduct industrial processes alongside my herd.

In this regard I would have to document every chemical they are using and how do I know what the likelihood is of those chemicals coming into contact with my herd and without knowing what they contain?

The problem with the process as it stands is, I am not entitled to have those questions answered.

The rights of coal seam gas companies seem to take precedence over my own to the point that, if I want certainty about those chemicals they are using or for my water to be periodically tested, they would bring me before an arbitrator who would give neither of those things but would give the company access to my land.

The dairy industry has been through a great deal in New South Wales and to have the uncertainty about coal seam gas hanging over our heads does nothing for investment or the wellbeing of producers we represent.

The other big unknown for us is what happens to our water resources? I rely on ground water to provide water to my cows and I know many other producers who do the same.

The dairy industry uses fairly dense stocking rates which would not be possible if we were relying on rain water alone.

We understand that the companies themselves are predicting a half a metre drop in aquifer levels for some Queensland projects.

If that was replicated here, we could expect some producers to lose water access, at least while bores were being drilled deeper, if that could be done.

There is also the potential that we would lose access to bore water permanently.

Bores running dry, with our stocking rates, is not just a production issue, it can quickly turn into a breach of our obligations to animal welfare.

In addition to concerns about the availability of water, we have serious doubts on whether these companies can guarantee the quality of our water.

The process, as we understand it, involves drilling past our aquifers to reach the coal seams below and then blasting the area with high-pressure water, sand and chemicals before bringing the gas, polluted water and some of those chemicals back up past our water and out for disposal somehow.

We are concerned there are no legislated standards that drilling must comply with and no independent authority charged with the leasing of the department's licence conditions.

There is simply no way for us to be confident that pollutants going to and from the coal seam will not make their way into the water and in turn into our livestock and the food chain.

This area is perfect for dairying. It has the rainfall to grow the feed we require, the infrastructure and enough producers around to sustain the processing plants and the services we need to run our business.

I have serious doubts about whether we can operate alongside the coal seam gas industry.

They cannot just pay for the land that is taken up by well heads, paddocks, ponds, roads and pumping stations and think that we can continue to run our business as usual.

There must be a tipping point where these things add up to such a reduction in the carrying capacity that I would no longer be able to run a viable business.

Land is expensive to the point where it can become near impossible for the next generation of farmers to enter the industry from scratch.

And there are not many farmers around who can spare the land taken up by coal seam gas infrastructure.

Combine this with the uncertainty of food safety, water and biosecurity and you will see soon that some of Australia's best dairying country will not have many dairies at all.

We strongly back the Coalition's Strategic Regional Land Use Policy, including the idea of setting up exclusion zones to ensure that coal seam gas does not infringe on areas we need for food production.

However, we recognise that NSW Farmers has been involved in the implementation of the policy since the election and has concerns that it may not deliver on everything promised.

 I really hope that this is not the case and the Government can deliver those promises quickly and in a way that gives the dairy farmers of New South Wales confidence to continue to invest in the industry and to continue to produce the best milk and freshest milk that our consumers love.

The Hon. RICK COLLESS: Mr Neal, can you tell the Committee where you get your water from, what depth you get it from and what sort of aquifer structure it comes from?

Mr NEAL: We have ground water wells and most of the year the water is two to three metres below the surface. We can drain on that except if we have a drought, then that does not supply all our water but it would probably supply 15 to 20 per cent.

The Hon. RICK COLLESS: How deep are your wells?

Mr NEAL: The total depth of the well would probably be five to six metres on our property.

The Hon. RICK COLLESS: So it is very much surface water. Are you aware of any different structure where the water is coming from, under the ground?

Mr NEAL: No, not myself.

The Hon. RICK COLLESS: Do you test your water on a regular basis?

Mr NEAL: We are required to. We have to for our food safety regime. It has to be tested annually.

The Hon. RICK COLLESS: And what is that tested for?

Mr NEAL: For pH, hardness, calcium and a couple of others. It is not a really long list but it is generally a guide to the water quality that we have and that will cover all water sources on our property.

The Hon. GREG DONNELLY: Thank you for coming today to give evidence. Matters other than difficulties and problems with possible water contamination may be an issue for dairy farmers as well. So, putting aside the issue of the water quality and what flows from that, would you care to comment on what other matters might affect the dairy farmer from having coal seam gas mining on their property, other than water matters?

Mr NEAL: We are all concerned about biosecurity and other things that go to running our business.

With people moving in and out, you lose control of what is coming on to your farm, especially if it is 24 hours a day because we cannot all stay awake for that long.

We are concerned about weeds because there are certain weeds that can be brought in on the wheels of trucks travelling through properties.

It is alright if that truck only travels to your own property but if it is travelling to other properties, picking up weeds and then bringing them back to your place, then you have an issue there for control of the weeds.

Also if there is a disease outbreak, what will happen then?

Are these trucks going to be stopped from running between properties?

There are issues like that. They are only two examples that I can come up with. It is to do with the security of your herd.

If there is a major disease outbreak and trucks whizzing everywhere, are we going to have to stop on-selling our milk?
That will affect the viability of our industry, for our farm.

The Hon. GREG DONNELLY: Realistically, in your experience as a dairy farmer do you see that satisfactory controls could be put in place to monitor, police and regulate those types of things?

Mr NEAL: I guess you could always put in measures to control them. There is always going to be exceptions to the rule. That is what we have to allow for.

Five times out of a hundred these incidents might occur where either disease or weeds are brought on to your farm and it is those incidents that are going to affect the farmers in the region. I am not sure how you do that.

The Hon. RICK COLLESS: On the question of the water and the potential problem of compromising the quality of the water from coal seam gas mining, have you or any of your farming colleagues had any experiences of any of the companies speaking to you directly about the issues with their proposed exploration?
Have you had any direct firsthand contact with any of the explorers yet?

Mr NEAL: Not myself. I have had no experience.

The Hon. RICK COLLESS: Have any of the other dairy farmers had any exposure?

Mr NEAL: Not from my region but I have only been on the dairy committee for a year and a half now, since I was elected on to the committee. So my knowledge of these things, being a person contactable by other farmers, it is sort of limited.

The Hon. GREG DONNELLY: Have there been any comments to you from any of your farming colleagues about any early contact with companies or any experiences?

Mr NEAL: No. Only there have been a lot of farmers who become overwhelmed at what is happening.

They feel very alone, and when you have people turning up and saying what is going to happen and what they would like to see happen, it is overwhelming for them and they find themselves lost, and they do not understand what their rights are and what they should be doing.

The Hon. GREG DONNELLY: Is some of that starting to happen already, in your experience?

Mr NEAL: I think so, especially further north, around Lismore and Casino. They feel that they have no rights and they feel like they are just one person. When you have a car full of people turn up at your property and you are one against five, it seems, you know, what rights do you have?

The Hon. JEREMY BUCKINGHAM: Thank you for your testimony, it was compelling. The issue of marketing in dairies is fundamental to the viability of the industry. What threat, if any, do you think that coal seam gas poses to the marketing, productivity and viability of your industry? Could you outline what you do with your milk and how you market it?

We have had submissions from Norco Co-operative, quite a big business. Can you tell us a little about what you are doing with your milk—whether you are working through a co-op and whether you perceive coal seam gas to be a threat or otherwise to the marketing and the productivity of your industry?

Mr NEAL: My farm supplies Norco. We try to be very environmentally friendly. We are a cooperative so we all like to work together as a group of farmers to market our milk. I am very aware of soils, and that impacts on the fertility of your soils and your being able to produce good quality grass.

I guess I focused before on drinking water for stock but there is also irrigation. When I use chemical fertilisers I like to reassure myself of the heavy metals in the fertilisers to make sure I am not overexposing my soil to these heavy metals.

A big concern for me is worrying about what is in the chemicals that these people are using.

If heavy metals are irrigated onto pastures and taken up by the grass that is then ingested by cows, or if it goes into the drinking water, then into stock via the water, and then into produce for humans, a lot of the farms will become unviable. There are regulations on how much, for example, lead or other heavy metals are allowed to be ingested by cows and then into milk.

One of my biggest concerns is the possibility of what these chemicals are. It will stop milk production. It will stop meat. It will stop all production off that farm.

Another big concern is about what will happen with the water. Is it going to be put into a pond? Is it going to be pumped? Where is it going to be pumped to? Is it going to be to be put into rivers to be diluted to run downstream? Are farmers going to pump from those rivers for their stock water and for irrigation?

It is not just the farmers. Gloucester is where these mines will be in our area. All the water runs out to the ocean. So there will be farmers downstream of Gloucester that will have access to this water.

We are a higher rainfall zone than Queensland. If they build ponds they will have to build ponds big enough to catch the rainwater because if the ponds overflow the water will still go down the drains.

The Hon. Dr PETER PHELPS: One of the things we have heard from a number of farmers happy to have coal seam gas on their properties, is that it represents a not inconsequential non-farm income in times of good and bad seasons. Is that applicable in the situation of dairy farming or is that a consideration beyond where you are thinking?

Mr NEAL: All farming is weather dependant. We have just gone through—not in the last two years, but five years before that there were large periods of drought, and even on the coast we were affected.

Upriver they have had reduced water allocations for irrigation. Downriver on the coast there was not enough rainfall to sustain grass; we were buying in fodder.

To have income other than from primary production would be a help but I guess there are other ways to get around that. You can store feed. In the past when agriculture was a larger industry and it had a greater impact on the gross domestic product, there were concessions to farmers to help conserve fodder for the tougher periods—so they were able to go through these periods—whether it be by tax or other means.

There does not always have to be direct handouts to farmers to get them through the lean times, which is sort of weather induced.

The Hon. GREG DONNELLY: Is the dairy industry looking for opportunities to expand and develop its marketing and, potentially, sales to overseas markets?

Mr NEAL: At the moment probably 50 per cent of Australian milk is exported. Only 50 per cent is drunk domestically, whether it is milk, cheese, yoghurt or ice cream. So we are relying on export markets.

I would like to see the agricultural industry keep going as a sustainable industry for one hundred or two hundred years. As I heard today, the world population is going to be seven billion people, so we need food to feed them.

As Dr Phelps said, we go through stages where production is reduced through drought or whatever, but if the world can contribute, including us, through aid or export to supply the food needs of other countries then that would be a good thing.

Agriculture is a renewable resource. It can keep going and going as long as we use that resource. I would like to see the land that I have left in a better state than what it was when I took it over, so it is able to keep producing for myself or my children or whoever takes the land on.

CHAIR: Has the NSW Farmers Associations Dairy Committee undertaken any work to prepare an information pack or a statement of rights pack to give to dairy farmers so that if they were to receive a knock on their door they would know what to do, who to call and how to conduct themselves?

Mr NEAL: I am unsure of that but there are pamphlets going around that are accessible to the members of NSW Farmers to access that. We have always got committee people on hand to help farmers if they need it.

CHAIR: So if one of these guys were to come and knock on their door they can ring someone for advice?

Mr NEAL: Yes. They will have legal advice and people to help them with all their needs.

The Hon. RICK COLLESS: Do you have to submit a chemical analysis of the fertilizers, pesticides and herbicides you use on farms to the foods standards people?

Mr NEAL: Yes, we do. For the chemicals and pesticides we use we have a chemical register, which includes time, date, amount and rates, and we also have to let them know what sorts of fertilizers we have been using.

The Hon. RICK COLLESS: What sorts of fertilizers do you use?

Mr NEAL: We use a broad range of chemical fertilizers, as in urea, blends of muriated potash and single super or superphosphate.

The Hon. RICK COLLESS: Are you aware of what the heavy metal levels are in superphosphate?

Mr NEAL: Not offhand, no, but I do know that they do exist.

The Hon. RICK COLLESS: There is quite a bit of cadmium in superphosphate, which can be a problem.

Mr NEAL: We have moved away from that, and there are other sources. We have used rock phosphate and triple super to try and get away from that.

The Hon. RICK COLLESS: Have you seen any test results for the water that is coming out of the proposed gas wells?

Mr NEAL: No, and I am unaware that the NSW Farmers Associations Dairy Committee has seen any of those results.

The Hon. RICK COLLESS: We do not know for sure that the water coming out of the coal seams contains some of these things you were talking about, do we?

Mr NEAL: No, we do not. I guess we all have that fear and that is what we would like to have allayed.
Information is power. We do not know. We are not being told for a reason.

The Hon. RICK COLLESS: I can assure you, and everyone in this room, that the Committee will be quizzing the coal seam gas companies about what is in those water samples. I have seen quite a few of them from one of the Santos' operations. There is a huge variability in the quality of the water, not only in the salinity of it but also in the other contaminants. We need to make sure that we are dealing with the facts, not the antidotes.

Mr NEAL: Yes. The NSW Farmers Associations Dairy Committee has put together a paper, which was submitted. I would like to see a lot of the recommendations put forward implemented.

CHAIR: Mr Neal, thank you for your evidence.

(The witness withdrew)
(Luncheon adjournment)
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