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

JT
16/10/2014 6:24:46 AM

When will people like David get off their backside and take on the real issues confronting farmers and all business in Australia. We have regulations causing the highest costs of creating anything from primary produce to office partitions. Our business is being taken over by off shore nations who make everything we once made, at a fraction of our costs & take our money. Due to crazy Aust regulations, we are transferring all wealth creating entities o/s so fast that our economy must soon collapse. When will David put energy into a fix for this catastrophe which is coming at us @ 100 mph
Meg
16/10/2014 7:21:33 AM

Why aren't all relevant comments printed? This pollie is clueless on rural matters and I suspect on many others. Cane farmers in the Herbert/Burdekin districts pay council rates 3 to 4 times the rates of other cane farming districts, often supply their own sewerage/water/electricity/servic e connections/waste removal and drive on unsealed roads. Burdekin irrigated farmers pay obscene prices for their annual water supply (used or not!!!! and infrastructure charges) outrageous electricity charges-1st world costs, yet, are forced to sell their sugar at a corrupted world price-below that of CHINA!
Geronimo
16/10/2014 9:42:39 AM

No one has the right to farm. People have the choice to farm. That they have the choice is the privilege.
Archibald
16/10/2014 10:18:04 AM

Geronimo, yes they have choice except when legislation, regulation and policy makes their farm non viable, so then they may have to sell for less than purchase price. I take it you don't have the right to live in the house you might own, and yet you would be paid just terms compensation if a road were to be put through your house and land. This no longer applies to agricultural land were government/community remove bits (water, carbon etc) for zero just terms compensation
Victor
16/10/2014 10:18:25 AM

This is very glib and simplistic economic rationalism. We have seen the recent result of letting the market run rampant, the GFC, and our government sensibly intervened. We want many more safeguards from government to prevent this happening again. To do so however is not incompatible from reducing subsidy and support to farms which have proved to be unviable. A better discussion would be a National Inquiry Into Agriculture which develops a coherent plan. Unfortunately for the Coalition such an inquiry would alienate some supporters and have to engage climate change so will never happen.
Hydatid
16/10/2014 10:21:13 AM

JT...what are the "one shore" nations ?
THE FARMER
16/10/2014 12:42:11 PM

Yes, David you can't eat wool but you certainly can eat what it grows on, sheep are dual purpose. The new owners making a better fist of it is no sure thing. Often those properties tend to be rolling ones, once in motion those blocks just keep falling over. Be it tree farms or MIS schemes, deer farms, jojoba. As for the single crop option, changing horses mid stride can leave you belly up. If you keep chasing markets you often never catch them.
JT
16/10/2014 2:29:09 PM

Its OFF SHORE nations Hydatid. It is the countries closest to us to our north, north east & north west. In those countries, they have millions of people much cleverer than us who have seen how we have become lazy & greedy and reliant on hand outs to survive. They are more highly productive & get only market rates for their toil. So all the investments are going to them to make & do all that which we used to do. Then they sell it to us cheaper than we can make or do it. Our savings are all being drained away to them. Soon, when our last cent is gone, we collapse. O/S win. Get the picture now?
stockman
16/10/2014 2:58:25 PM

Has this guy got shares in a tattoo parlour? He seems to know a lot about them.We farm because we can't (or don't want) to be senators.We do not have six years of guaranteed income plus the perks that go with being a senator.
chops
16/10/2014 6:45:22 PM

This is far less than we should expect from even an accidental politician, this is merely a backhanded swipe. Why don't you use your limited time on stage to put forward a couple of issues that you are passionate about, outline why, then work hard to implement some real change. Get off your little soap box and get to work.
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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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