Old moans don't float

In economic terms most farmers are doing fine and some extremely well.

IN A recent opinion article in a major newspaper it was asserted that “Northern Australia will never be the food bowl of the world, Asia or even Australia.”

While agreeing that the rapidly growing Asian middle class offers Australian agriculture a major opportunity, the article argued that agriculture in southern Australia was in decline and needed a “massive dose of investment and innovation”. It questioned where this would come from, inferring no difference between public and private investment and disapproving of foreign sources.

Investing in the north would lead to ongoing neglect of the existing industry and amount to a mistake of “epic proportions”, it said. Furthermore, northern agriculture was littered with spectacular failures and any additional development would be foolhardy.

Fairfax Media economic columnist Ross Gittins was recently quoted as saying Australia could not play a significant role in feeding Asia’s growing population unless it contributed a lot of taxpayer subsidies to farmers, researchers and exporters, which would not be forthcoming.

Attitudes like these are common among certain groups of people, who believe that modern agriculture is unsustainable, the environment has been profoundly degraded since European settlement, and the best response is to minimise our footprint.

Opening up the north to agriculture is therefore opposed at every opportunity. A good illustration of this was seen in the 2009 Northern Australia Land and Water Taskforce report, which ignored the potential for new dams, saw no potential for expansion of agriculture and recommended a steady contraction in the area utilised by it.

Those who hold such views, of whom I suspect Gittins is one, are not particularly influenced by data. Their views are essentially ideological. Most Australians, on the other hand, do not agree humans are a pestilence inflicted on a pristine world and prefer a more optimistic view.

That puts the onus on those who know about agriculture to support that optimism with credible information and positive ideas. The hoary old moans that farmers are always doing it tough, there is nobody to replace all the old farmers and no future in agriculture, should be drowned out by those who know better.

There is plenty of positive information to help do that. In economic terms most farmers are doing fine and some extremely well. While the high dollar and green and red tape are a major drag, farms are not going broke any faster than they have in the past. In fact, the overwhelming majority are viable and profitable. The others blame someone else, but that is not new. The main thing is to remember they are not typical.

As for the environment, it is improving all the time. Whatever its other faults, the Murray Darling Basin plan will at least lead to more water in the river system and greater water use efficiency. The chances of the Murray turning into a series of water holes during droughts, as it did before humans arrived, are now about nil.

Stewardship is taken very seriously. In 2009-10, 52 percent of agricultural businesses undertook activities to protect native vegetation, 45 per cent wetland protection and 49 per cent river or creek bank protection. The old problems of salinity and erosion are far better managed than they were even a couple of decade ago.

There are also plenty of entrepreneurs still willing to risk their own money in new ventures. Whether they are growing a different crop, importing a new breed of livestock or moving to a new area, they are giving it a go.

These are the people who will explore opportunities to grow food for Asia in northern Australia. Some will fail and lose all their money, foreign investors who do not know the country well among them. But out of it will emerge the knowledge required to be successful.

Given all that, what role should governments take in developing the north?

The main thing is to get out of the way. That means removing red and green tape and being less greedy about taxation. These are worth doing at any time, but especially important with new ventures involving extra risk. If ever there was a case for a special economic zone offering reduced regulation and lower tax levels, this is it.

In some cases infrastructure is required, mainly roads and ports, and government investment may be required. But there is absolutely no case for subsidising anyone. A lower level of taxes is not a subsidy, it is reduced confiscation.

But those who oppose the development of Australia’s north do not believe in private investment, lower taxes or reduced regulation. They view investors and entrepreneurs as rogues and seek more regulation, not less. Theirs is a grey world of collectivist poverty.

How do I know this? The opinion article in the major newspaper was written by Lyndon Schneiders, national director of the Wilderness Society.

  • David Leyonhjelm has been an agribusiness consultant for 25 years. He may be contacted at reclaimfreedom@gmail.com
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    Bim Joyd
    26/04/2013 6:49:09 AM

    Spot on! Keep shouting David!
    26/04/2013 7:20:56 AM

    Ever heard of peak oil? or peak phosphorus? or HEAP (Hampered Effluent Accumulation Process) Traps? No disrespect to our farmers, I love you dearly, but I am sorry, in the long term, industrial agriculture is unsustainable - Say what you will, but you cannot, repeat CANNOT escape resource constraints or the laws of physics. Besides the fact that raw agricultural commodities will always have lower export earning potential than high value biotech and technology products in global markets.
    Western Worrier
    26/04/2013 7:38:06 AM

    What a refreshing article David, A revamping of CSIRO would be a good start to help R&D expand into new areas geographically.
    26/04/2013 8:02:04 AM

    Just like all capitalists you ask the gvernment to get out of the way and remove all regulation. Then you put your hands out and ask for infrastructure. Sounds just like the banks to me. No regulation, high risk and when it all fails blame the government and put your hands out for compensation.
    26/04/2013 11:01:40 AM

    Skeptic - what do you propose in place of 'industrial' agriculture? Gardens on suburban roofs? Maybe a couple of killers in the back yard? Should we perhaps give up on food production because there's more money in selling iron ore and iPods? Betcha there won't be when everyone is starving. Resources are limited, that's of course a fact. But we're learning to do more with less all the time. Today farmers can produce a crop during a season that they would have struggled with even 10 years ago. Peak oil and phosphorus will come. But we'll have learned to use them even better by then.
    26/04/2013 1:24:15 PM

    Realist - What do I propose? I am not sure there is anything I can, we are in a real fix. Your statement "Peak oil and phosphorus will come. But we'll have learned to use them even better by then" is a classic non sequitur. Peak implies a peak followed by irreversible decline. Ever heard of EROI - Energy Return on Investment? How much is your food going to cost if you have to burn 1.5 barrels of oil to pump one out of the ground? An EROI like that is a dead loss. Likewise phosphorus, if demand exceeds supply. You may not like it but, fact is we will have a major population crash this century.
    26/04/2013 5:21:21 PM

    The ill named 'Skeptic' peddles Malthusian doctrines that have been proven wrong over and over again, for two hundred years. Malthus's excuse could be that he made no allowance for human ingenuity and the processes of technological advance.' Skeptic's' response is to prevent human ingenuity from being exercised by suppressing the conditions that allow technological advance.With the knowledge we have today, there is every chance that Malthus would come to a different conclusion as Bjorn Lomborg has done. There is not the slightest chance that 'Skeptic' will be influenced by the evidence.
    26/04/2013 11:04:53 PM

    seethelight - You see I am actually open to being convinced, but present the evidence... Faith in technological advance providing a solution is no different to faith in an afterlife. Where is your proof? The facts are, peak oil, and peak phosphorous (unless we recover all phosphorus) will occur. How affordable is your food going to be with oil at $200, $300, $400 a barrel? I will put my faith in energy return on investment and physical stocks of resources rather than the ramblings of some luddite.
    Bim Joyd
    27/04/2013 9:08:25 AM

    Skeptic you should really get with the new global energy situation. Imagine the US being self sufficient in energy as it soon will be.Read Matt Ridley's "The Rational Optimist" and take on board seethelight's comments.
    27/04/2013 9:20:28 AM

    Skeptic shows as much appreciation of the facts as Lyndon Schneiders did in his article. In 2009 it was estimated there was 90 billion tonne of rock phosphate available in the world. Enough for greater than 500 years production at the current rate. Peak phosphate is a long way off. Skeptic is typical of those who may know a little to be dangerous but can't tell the difference between barley and wheat.
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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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