I’m from the government and I’m here to help

Why is it OK for the taxes of other people to pay for specialised advisers for farmers?

IF you run a small business such as a dress shop or accounting practice, there are no specialised public servants waiting to give you advice. At best you’ll find someone in the tax office to tell you if something is deductible (and best of luck if you believe them) or someone in industry development to explain how you don’t qualify for targeted assistance because there are no photo opportunities for the Minister.

Even if there were such public servants, the chances are you wouldn’t think all that highly of them. Anyone who was any good at running a dress shop or an accounting practice would be doing it. As George Bernard Shaw put it, those who can do, those who can’t teach.

But that logic is not applied to primary production. For over a century governments have employed advisers, typically agronomists, veterinarians and livestock specialists, to help farmers run their businesses. The current premier of Victoria, Denis Napthine, is a veterinarian whose career prior to politics was advising farmers as an employee of the state department of agriculture.

Historically, farmers have been seen as warranting different treatment due to their importance to the economy and production of food. Wool was once Australia’s main export earner while fear of running out of food can be used to justify almost anything.

But while agriculture is still a significant export earner, it is now totally dwarfed by minerals and energy. And we are far more likely to run out of energy than food. That prompted a rethink by state governments in the 1990s that led to the winding back of advisory services. For a time it looked like they would all disappear, but that did not happen. In fact there has been a moderate comeback.

Of course the justifications have changed to suit the times. There is greater focus on overall productivity and regional problems. Trade issues get more attention and state governments are often involved in delivering programs developed by others, such as the R&D corporations.

And there are plenty of advisers. In Victoria, for example, state agriculture personnel coordinate management improvement programs for wool, lamb, beef, horticulture, dairy and grain production.

All of which raises an important question: why is it OK for the taxes of other people, such as dress shop owners and accountants, to pay for specialised advisers for farmers?

If government advisers were to disappear, the leading third in each farming category would barely notice. Nearly all of them engage independent advisers to help remain up to date and profitable. Those advisers obtain their information from many sources, including the R&D corporations, but not from government advisers.

The middle third are heading in the same direction and would cope well too. Many already have independent advisers, some on a shared based, although the idea of getting something for free still has some interest.

It is the bottom third that would notice and kick up a fuss. These farmers cannot afford to pay independent advisers but rely on free sources of information including neighbours, distributors and government advisers. They tend to be slow to adopt new ideas and struggle to remain up to date.

One reason is that most of them rely on off-farm income to stay in business. It is difficult to keep on top of things when you are away shearing, fencing or driving machinery.

They continue farming because of lifestyle, the belief they cannot do anything else, or in the vain hope that one day things will turn around. They are also the people who predict the end of the world, or at least famine and pestilence, if more is not done by the government to assist them.

It is nonetheless a fact that agriculture would be considerably more productive if this bottom third sold out to the highest bidders and went fishing. While they have every right to run their farms as they please, good or bad, collectively they are a brake on the industry.

Farmers who require advice ought to pay for it themselves. While they are important small business owners, they are no more important than other small businesses including dress shops and accountants. And just as there are no taxpayer funded advisers helping dress shops and accountants stay in business, there should be none helping farmers.

  • David Leyonhjelm has been an agribusiness consultant for 25 years. He may be contacted at reclaimfreedom@gmail.com
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    READER COMMENTS

    Tigerdicky
    4/04/2013 2:43:55 AM

    As the Delltones sang ":Get a little on your hands mate"
    Becg
    4/04/2013 6:09:43 AM

    I see where you're coming from and as a qualified ag economist I've often wondered the same thing (even while providing these free advisory services). However with consumers now demanding more from our farmers in terms of food sustainability and ethical production I think they have a responsibility to help farmers achieve these standards. Free services also often provide the catalyst to seek out more paid services which supports those businesses in turn.
    Bruce Watson
    4/04/2013 6:28:57 AM

    This fellow misses the central point that while mining, etc. might be more significant than agriculture at present, the latter remains the only sustainable industry into the distant future. He doesn't understand that agriculture confronts innumerable difficulties that require specialist help. Farmers are multi-tasking every day by the very nature of their work, but they can't do it all. Most urban small-businesses are transient services.
    AW
    4/04/2013 7:35:05 AM

    David Leyonhjelm has certainly painted everyone with a broad stroke of the same brush and I think his attitude to small or less successful farmers is very poor. Not everyone starts from the same place or has the same issues to contend with. That doesn't mean that I agree with the current system. Farmers generally work in isolation and at the end of the supply chain and are generally price takers rather than price makers. If something could be done to ensure minimum payments for commodities, that might help. A lot of work is being done to support the notion of buy Australian but is it enough?
    maddog
    4/04/2013 7:46:31 AM

    Everyone else in the world has to pay for advice whether they are struggling financially or not and many are not sitting on multi -million dollar businesses. The real question here is of the bottom third that rely on free advice how many of these businesses has the free advice elevated to the top 20%? I'd suggest very few if any.
    telya
    4/04/2013 9:14:30 AM

    The same arguement could be put forward for the car industry, why are we as tax payers sponsoring the big three, we could be importing all cars from Japan, China or Italy. As we know post war agriculture was supported by government policy but the Keeting government and others wanted Australias level playing field more level than other world economies. This had a short term benefit in on farm efficiency but in the longer term we battle low commodity prices and low innovation and science funding. Now China rates higer in innovation than Australia (see Wikipedia on Innovation) funding research.
    Milk Maid Marian
    4/04/2013 10:03:34 AM

    We engage independent consultants but also treasure govt R&D programs. The two are complementary and do learn from each other. As for why ag deserves research support: because it is not competing on a level playing field. While most other nations subsidise their farmers because they know the value of food and a good environment, Australia does not and cannot. That means we need to farm smarter. Nor does a dress shop need to sell double the amount of dresses every 10 years to stand still. And I haven't seen any figures on ROI of dress shop R&D but in ag, it's very high.
    David
    4/04/2013 12:27:17 PM

    Mr Leyonhjelm, know better than to suggest "most of them rely on off-farm income to stay in business". .... most do have off farm income, though it is more business diversity , than support income ,... Mr Leyonhjelm would do well to research his comments a bit further ... in Queensland there is the Deparetment Tourism, Major Events, Small Business and the Commonwealth Games, which as the name suggests provides support to small business. As an agribusiness consultant, Mr Leyonhjelm, makes a good journalist!!!
    Tim
    4/04/2013 4:22:44 PM

    The state is the great fiction by which everybody seeks to live at the expense of everybody else. - Frederic Bastiat
    andy
    5/04/2013 4:08:43 AM

    Come over to the EU. Here you have subsidised advisors and government inspectors from the subsidy police telling farmers where they are going wrong
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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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