WHILE deregulation of the dairy industry was inevitable, state governments would have to provide compensation for quota entitlements in addition to the national dairy restructure package, according to a Senate inquiry report. Chairman of the Senate inquiry into dairy deregulation John Woodley said the committee found commercial pressures would make deregulation inevitable. However, he was disappointed at the lack of political will from major parties to confront the market forces pushing for deregulation of sensitive rural industries. He said the committee had therefore been forced to look at ways to manage the outcome so dairying communities were not decimated. "Under deregulation, farmers will lose and there is no benefit to consumers," he said. "It is basically the transfer of millions of dollars from farmers pockets to those of the supermarkets and milk processors." Mr Woodley said the committee had recommended the Federal Government call an urgent meeting of state and territory agriculture ministers to determine a framework and timeframe for the co-ordinated deregulation of the dairy industry. "The issue of quota compensation and regional adjustment schemes are also critical," he said. The report estimated farmers commonly had between $200,000 and $1 million invested in quotas, with this value eroded considerably since full deregulation became a probability. The report found deregulation was mainly supported by the large Victorian co-operatives but that there was "considerable disquiet" in the Victorian dairy farming community on the advantages of deregulation. WA Farmers Federation (WAFF) president Danny Harris said the Senate report reflected the views of WAFF's Dairy Council on the commercial inevitability of deregulation and the effect on the dairy industry. He said many WA dairy farmers still had serious concerns about how they would survive deregulation, even with the restructure package. Mr Harris said WA dairy farmers, particularly in the Harvey and Brunswick area with smaller irrigated dairies and high quota exposure would be hardest hit by deregulation. He said that, as the package still had to go through both houses of Parliament, there would be an opportunity for the Federal Government to contribute to the package in some way. Mr Harris said this could be through reducing tax or paying some of the huge delivery costs on the $1.8 billion package, which would effectively give more money to dairy farmers. He called on WA Primary Industry Minister Monty House to endorse the Senate report and commence negotiations with industry on state-based compensation. "This will give WA dairy farmers a healthy start in a deregulated environment," he said.