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.
Date: Newest first | Oldest first

READER COMMENTS

PayAttention
15/10/2014 8:10:02 AM

David's right, but so is Archibald. When the government adds unreasonable restrictions on us they change the market. I have just under 1300 ha of pasture that I'd like to convert but there is no way I can get a permit with the current obscene laws. For that matter, why should I need a permit? My land, my choice
King Billy
15/10/2014 8:43:50 AM

Remember the Wool Board fiasco and the Wheat Board nonsense. Nobody owes anybody a tax payer subsidized free ride. There are smart farmers and there are not so smart farmers, same as every other walk of life. Market Access is what Government needs to help Agriculture with, not subsidizing failing segments of any Industry.
Bushie Bill
15/10/2014 9:11:41 AM

If RARA had any brains, it would draft David Leyonhjelm into the National Party, and sack the current leadership. DL would do more for agriculture than a thousand Boofhead Barneys and that bloke who is currently leader but is so invisible and unremarkable I can't even remember his name. He would ensure you are disabused of your belief that you are "special people" who do not have to be business operators because you are farmers. That would be a major step towards solving all your imagined woes and misfortunes, wouldn't it?
Hydatid
15/10/2014 10:06:58 AM

The parallel with the Baker or Tattooist is valid up to a point....the Government and environmental imposts that Farmers suffer means that they need to be treated differently...or do they?....read the LDP website and it effectively says that farmers should not have to put up with all this crap as well...if they are freed from that then I agree...treat them no differently than the Kebab shop owner !
James Mudgee
15/10/2014 12:03:22 PM

In relation to restrictions on what farmers can do on their land, all businesses have restrictions on the use of land. Land use has an impact on neighbours and regions, as well as future generations. You can either be selfish, or be a custodian for the future. I've met plenty of farmers (including my own parents), who are the former. Others realise the broader benefits of the latter.
Archibald
15/10/2014 2:57:44 PM

James, That's fine except the land was and is sold as agricultural land, then the community and the government want to use it for regrowth trees as a carbon sink, or decide it shouldn't have access to water after the fact. I accept the community and the government can do this, but please buy it back at market price and return it to the crown if you both are going to make it non viable as agricultural land as is happening. Farmers cannot fund community and government wants for zero as is happening too often now!!
Carl
15/10/2014 3:31:27 PM

David, I'm a grower in Bundy and Glenn Lazarus came to town on the weekend and met with a bunch of us. He said his dad was a shearer and he's worked on farms. He seemed genuine in wanting to help us and understand our frustrations. He's the first pollie that's made the effort to do this. No one else has. If you've been in agribusiness for so long why do you seem to understand so little about the industry, David?
Lee
15/10/2014 4:16:26 PM

Bushie is on the right track here, thr Liberals and Nationals would be surprised about the number of their supporters are now looking at thr LDP as the alternative that looks as though it cares more for agriculture and property rights than the Libs and Nats ever have!!
GFA
15/10/2014 5:03:57 PM

David, you devote 7/8 of your article to nonsense about external cheer leaders and the hand over taxpayers money to farmers. The first issue is irrelevant and the second is virtually non existent. You are subsidized very heavily with taxpayer funding & so far seem to have done BA to justify it. The closest you have come to doing anything is to talk some key issues in your 2nd & 3rd last paras. What about a Bill to attack the issues like labor & RE regulations just for a start. Blind Freddy can see they are our 2 urgent problems, and the best you can do is a few words at the end. Do something.
Rational Ag Policy
15/10/2014 5:57:26 PM

David, fantastic blog. Rural Australia will keep losing their young people to rewarding, challenging and most importantly high paying city jobs, yet they insist on their most unprofitable and poorly run businesses being propped up. And to those who argue we would all starve to death if inept business people were allowed to go broke, rubbish. There is a long line of competent, well financed farmers capable of rational investment decisions waiting to buy your place. Why not sell up, put your money in the bank and let rural Australia get on with making a profit.
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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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