ONE of the frustrations of life is not being able to have everything we would like. Everyone faces choices and trade-offs.
Women who aspire to both a career and parenthood know this especially well, but even governments understand (or ought to) that it’s not possible to fund parental leave, education, disability support, unemployment benefits and lower taxes without multiple trade-offs.
It is no different in agriculture. A trade-off is required between mining and farming, for example. Many people would like farm land to be left undisturbed to feed or clothe the world. Equally, many would like Australia to enjoy energy security and not rely on oil imports from unstable parts of the world.
While it is not always one or the other (farming can co-exist with CSG extraction, for example, but not open cut mining), nobody ever gets everything they want.
Another example is the relationship between foreign investment and access to export markets. Choices and trade-offs are starting to become important.
Most people are aware that agricultural exports contribute substantially to our prosperity, although perhaps not as many realise the value of coal exports far exceeds agricultural exports or that gas exports may soon eclipse both of them.
Many also oppose allowing foreign investment in Australia, especially in farm land. They fear foreign ownership will have negative consequences for the whole country, although I confess I don’t quite understand what they might be.
It is frequently assumed that our agricultural produce is easy to sell, with no shortage of eager buyers. In fact we are competing in the global marketplace against countries such as Canada, Chile, Brazil, Argentina, USA, New Zealand, Russia and the EU. While our produce always sells eventually, the price is heavily influenced by which market it is allowed into.
If we can sell into Japan, Korea, USA, the EU or China, for example, the price is nearly always significantly higher than if we sell it into Bangladesh or Egypt.
The big mover among these is China, which has a huge and growing middle class seeking higher quality food and not inclined to trust local sources. There is a problem though, in that whereas China has free trade agreements with Chile, New Zealand, Peru and Thailand, it does not have a free trade agreement with Australia.
Moreover, as I hear it, it is not likely to agree to one if Australia starts blocking Chinese companies from investing in Australian agriculture. I also anticipate China’s thinking will not be unique.
So there we have a classic choice and trade-off quandary. Should we allow Chinese investment in Australian agriculture, notwithstanding widespread misgivings about foreigners owning land, in order to maximise our export performance?
Or should be accept lower export returns as the price of preventing Chinese investment in agriculture?
There are people on either side of the argument who feel quite passionate about it. But those who favour unrestricted foreign investment are at least well aware of the concerns of their opponents, and maintain they are either unfounded or can be adequately managed.
The same cannot be said for those who oppose foreign ownership. They simply do not acknowledge that there is a choice to be made that involves trade-offs. Many even think we can prevent Chinese investment in farm land, keep out Chinese made products in favour of locally made products, while selling our agricultural produce to China without restrictions.
I am firmly in favour of maximising our national prosperity on the grounds that it helps more people and reduces poverty. Turning away foreign investment, refusing to buy cheaper products because they are made overseas, or limiting our export performance, will reduce our prosperity.
Whether we do any of these depends on the choices and trade-offs we make.
David Leyonhjelm has been an agribusiness consultant for 25 years. He may be contacted at email@example.com