Farming's fair weather friends

Fairly obviously, farmers produce food because it is profitable, not for charity

NOT many people, with the exception of tattoo artists, claim to identify with the needs and aspirations of the tattooing industry. Neither do many empathise with selling cars, installing kitchens or making bread unless they also work in those sectors. They have few, if any, external cheerleaders.

And yet there are many people who, despite having trouble identifying which end of a sheep eats grass, nonetheless claim to be totally on side with farmers and their quest to make a living. Moreover, they advocate using other people’s money to help farmers financially. For some reason farming, and farmers, are seen differently.

This phenomenon is not new, but I was reminded of it recently when listening to the maiden speeches of two of the Palmer United Party senators, Dio Wang and Glenn Lazarus. Neither has a background in agriculture, yet both waxed lyrical about farming and its need for support.

Lazarus said Queensland agriculture was “losing farmers everywhere”, and “we should be supporting our farmers and producers .. (and) not stand idly by and watch our farmers and growers decimated by inaction, weather, subpar infrastructure, poor economic conditions and ruthless corporate greed.”

Wang said, “our farmers are doing it tough. We need to do something about it so … our farmers do not lose out.”

Various others have expressed similar sentiments, and not just in Australia. Since 1985 an organisation in America called Farm Aid has held benefit concerts to rescue family farmers from mortgage default. In countries like France and Germany, farmers are viewed as cultural custodians and paid to run their farms inefficiently in order to meet the expectations of their urban supporters.

And yet nobody says a word when tattoo parlours, car dealers, kitchen installers or bakeries are in trouble. Politicians do not rush to their side and nobody suggests they should be bailed out with taxpayer funds. If they strike trouble, they are on their own.

The reasons for this difference are neither amenable to rational analysis nor a product of deep thinking. It is mostly about feelings and emotions. To the extent that reasoning is found, it is mainly along the lines of: farmers are producing food (even those who grow cotton or wool) and if they didn’t, we would starve. By contrast, if all the tattoo parlours in Australia were to close down, life would go on.

Fairly obviously, farmers produce food because it is profitable, not for charity. Moreover, supply responds to demand based on price signals. If it becomes unprofitable to produce one type of food, something else is grown, potentially including cotton or wool. Even when there is perceived to be a single ‘crop’ option, such as in the top end with beef cattle, there are different markets that can be targeted.

Also obvious is the fact that while all tattoo parlours could be literally closed down (although backyard tattooists may continue), it is inconceivable that Australian farms would stop producing food. Even if every farmer in Australia was to go bankrupt, the farms would remain in existence and inevitably bought by others to return to production. The only exception is land on the edges of deserts, which tends to move into and out of production according to seasons and prices.

Claims that agriculture is unprofitable and that farmers are doing it tough are really referring to the performance of individual farms, not the overall situation. Moreover, they refer to a temporary situation; if they are genuinely unprofitable, farm owners will either find a way to return to profitability or transfer ownership to someone else. In either case the farm will be profitable again.

When Glenn Lazarus bemoaned the fact that Queensland has lost over 100 dairy farmers since Coles initiated the milk price war in 2011, he ignored the fact that national milk production has not declined. Victorian dairy farms, which are vastly more efficient, have filled the gap. Complaining about that makes no more sense than arguing that Tasmanian farmers ought to be able to grow pineapples competitively.

Where the outside cheerleaders for agriculture go wrong is in assuming that individual farms should all be profitable, and if they are not, they should be helped with the false generosity that comes with handing out other people’s money.

While it might be a nice wish, and certainly individual farmers would like it to be true, the profitability of every farmer should be of no concern to governments. Just as individual tattoo parlours are allowed to fail, often to be taken over by new owners who make a better go of it, individual farmers must be allowed to fail so their farms can be taken over by those who are more capable. The use of taxpayers’ money to prevent failure is immoral, whether it is a tattoo parlour or a farm.

But it is not immoral for governments to seek to overcome the barriers that prevent businesses, farms included, from increasing their profitability. Indeed, since many of those barriers were erected by governments in the first place, it could be seen as a basic duty.

Thus Glenn Lazarus was on the right track when he referred to subpar infrastructure, power costs, government fees, taxes, labour, insurance, red tape and slow, erratic and often questionable decision making, because these are either a function of poor government policy or substantially influenced by it. Other examples include under investment in infrastructure at the expense of over-staffing of school; inflexible labour rules, subsidised renewable energy, and high taxes.

But he was wrong to imply it is the government’s role to save farmers from drought, weather, falling world commodity prices or low supermarket prices, because that would require the expenditure of other people’s money. And unfortunately, a lot of people are too fond of that.

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FarmOnline
David Leyonhjelm

David Leyonhjelm

has worked in agribusiness for 30 years and is a Senator for NSW representing the Liberal Democrats.
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READER COMMENTS

FFS
28/10/2014 5:13:53 AM

Other than the Australian selective socialist unionist, there is no fatter pig with its snout in the trough than the Australian politician.
John from Tamworth
27/10/2014 1:56:20 PM

Rational Ag,you have summarised the situation very well.
LC
23/10/2014 5:35:18 AM

Apologies Consolidated, I refer to comments by Rational Ag Policy and not you.
LC
23/10/2014 5:14:21 AM

I cant believe your naivety Consolidated. Listen to yourself. You acknowledge that the US & EU is corrupting the world market and lowering the price you get for your exports. And the best you can come up with is that their action makes your cost of food cheaper. Well that is totally wrong for starters. We get no benefit in food costs from the US & EU action on those products. But the critical point is that you acknowledge the deregulated system you argue in favor of does not work and yet you still support it. Your reasoning is missing and your answers defy logic.
Rational Ag Policy
23/10/2014 4:31:10 AM

LC - European and American farmers hold a lot of political leverage, and as such extort money from the general public via a pile of different assistance schemes. This is unlikely to change any time soon. And to be honest, if they want to take money from their taxpayers and give it to me via slightly lower world food prices, I am all for it. This is nothing new, if you purchased your farm any time after WWII, you will have made an investment decision knowing this and knowing full well the small effect on world prices. You knew the rules of the game and cannot complain about them now.
LTF
22/10/2014 4:50:39 PM

Consolidated says, "competing with you is a breeze". If ever there was an example of naivety, it is one Aussie wheat export grower, seeing his fellow wheat growers as his enemy. How myopic is that? That is, exactly as myopic as the international mega merchants, now controlling our industry want us to be. They want us to fight each other for their bid, and not to unite and make them compete hard to get our wheat. That is exactly why they hated us when we had the market power to negotiate with them or bypass them under our single export desk. Our rivals are the US & EU Govts who corrupt prices.
Dalby
22/10/2014 2:40:50 PM

Consolidated, as I have told you before, don't be too gung ho. When the tide goes all boats are left high and dry. You need to focus more on what the tide is doing than what the other boaties are doing. The fact is that all farmers today are worse off and the tide is not turning. If it was better off, there would be more people involved, The ABS stats show that the income from your ton of wheat today buys you only one sixth of what it bought you in the 1900's should be one sign post that is easy enough for even you to see. Better investigate that eh before you too run aground.
Consolidated
22/10/2014 9:40:41 AM

One thing is for sure, LC. Competing with you is a breeze. The Ag Socs are rapidly handing over control of the industry to more profitable free market thinking farmers who continue to be highly profitable year in year out. The day you're all at the coast will be a happy day for this country.
Jock Munro
22/10/2014 8:54:56 AM

Rational Ag Policy, You have fallen for the spin-the AWB was rewarded for performance-Wheat Industry Benchmark. -look up the old WEA site. It is the merchants that have been gifted our industry that are showing a true lack of commitment.
LC
22/10/2014 8:27:31 AM

If Rational Ag Policy is so rational, answer this question. Why is it that the policy you support that now exist in USA & EU, is such a failure, that the Governments in those regions find it necessary to prop them and their farmers up with billions in taxpayer subsidy $$$s. These subsidies include guaranteed minimum prices, all risk crop insurance cover, $billions in funding of US farmers marketing promotion on export markets. The list goes on. You are in fantasy land if you think that on your own you can compete with that. So much for your rationality.
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Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com

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