Are farmers owed a living?

While foreign support schemes are not the answer, neither is a strategy of nil support

I AM repeatedly asked “Do you really think a farmer is owed a living?” and “Do you really think taxpayers should subsidise farmers?”.

These questions are often accompanied by a mindless and ignorant rant about agrarian socialism motivated by an ideological belief that anyone who suggests that the government has a responsibility to ensure the viability of the agricultural sector is some sort of heretic or just stupid. The “free market” true believers are by now in a lather and their comment reflex is triggered without needing to read another paragraph.

However, there are some people who genuinely want to understand an alternative point of view. In true political style, I would like to answer these questions by posing a few of my own.

Is a farmer less deserving of an opportunity to make a living in his profession than anyone else in the economy?

The discussion around the rights of the individual farmer is problematic. A farmer is responsible for his or her own enterprise and is no more or less deserving of a livelihood than any other business person. The underlying issue is around the viability of the sector rather than the notion of every participant’s right to a livelihood.

As much as I enjoy a nice cup of coffee, the reality is that the proliferation of coffee shops on the North Shore of Sydney is not as important to the long-term economic needs of the nation as stabilising agriculture and the manufacturing sector.

Agriculture is an essential industry and therefore it is in the national interest that there is real potential for participants to prosper. This should not be misinterpreted as farmers being owed a living, merely that there is suitable inducement to encourage investment.

Is it reasonable that producers and manufacturers of food be expected to subsidise the average taxpayer?

Invariably, people react very passionately to the suggestion that they are taking advantage of farmers, but there is an entrenched double standard applied to the food business. On one hand, we are encouraged to regard the food business in the same way as any other business, but on the other it is a social issue of great importance to ensure the provision of safe, affordable food.

I can already hear the free market zealots writhing with outrage at my apparently socialist agenda suggesting agriculture is not a business, but the most glaring example of this societal double standard is the lack of GST on food. It does not matter how you argue it, this is the best barometer of society’s attitude to the business of food. The fact that imposing GST on food is regarded as political suicide emphatically highlights that the food business is not the same as other enterprises in the economy.

This hypocritical phenomenon is not global - many countries do not assert that agriculture is a business at all and regard it as a primary social imperative and they pour money into agricultural support mechanisms.

As a result, Australian farmers compete with heavily subsidised overseas producers and predatory corporates in the global food market.

In contrast, Australian consumers enjoy relatively unfettered access to cheap, subsidised imported foodstuffs.

Meanwhile, Australian farmers receive third world prices essentially at global parity pricing while they incur first world costs of production. As a result, Australian farmers are carrying the financial burden of global agricultural subsidies while consumers benefit. Australian farmers are in effect subsidising consumers.

Can Australia afford to not ensure the long-term prosperity of agricultural production?

Without going into all the reasons here, my answer is no.

The question itself is important because when we are faced with an investment decision it is better to ask if we can afford not to do it before we ask if we can afford to do it.

The reality is that if we assume we can’t afford the investment we limit our thinking around the investment. Alternately, if we decide we can’t afford not to invest, then our thinking shifts from “can we?” to “how can we?”. These attitudes are profoundly different and invariably yield different outcomes.

The simple fact is that for all the posturing of government representatives and high handed rationalists that continually deride people who are concerned about the obvious and alarming trends in agricultural economic performance, the problems are real.

We must develop domestic agricultural policy that reflects our situation and effectively mitigates global policies because agriculture is an essential industry and it is in the national interest to ensure that the sector is viable.

This does not mean Australia should adopt foreign agricultural support strategies. There is ample evidence that some foreign subsidy programs have been detrimental to productivity growth and created an unsustainable dependence on support. Clearly, this is not the answer.

Australian agriculture has been innovative and efficient to compete thus far. In truth, being under some pressure has been a strong motivator to evolving farming systems.

However, there is a limit to the productivity gains achievable in the most volatile production environment in the world.

In the context of rising farm debt, declining terms of trade, an aging workforce, increasingly volatile weather and increasing farm foreclosures, it is clear that the sector is buckling under the pressure that now exists.

Several decades ago the Australian government made decisions to progressively unwind support to agriculture. Thirty years ago that may have seemed like a reasonable decision, but the policy, trade and agricultural environment has changed considerably and on top of unsustainable commodity prices, soaring production costs, increased regulatory burden and unmitigated weather risk, we now also suffer the lowest levels of government support to agriculture in the OECD.

While foreign support schemes are not the answer, neither is a strategy of nil support.

The short answer to the original questions is no, I do not think farmers individually are owed a living nor should they be subsidised unfairly. Equally though, I do not think the alternative scenario of inequity is reasonable either.

The real issue is not the profitability of the individual farmer, it is about the viability of the sector generally. In spite of the name calling and ideological hand wringing, there is plenty of evidence that Australian agriculture is not getting a fair crack and it is essential that these concerns are acknowledged, assessed and addressed objectively.

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FarmOnline
Pete Mailler

Pete Mailler

is a farmer on the Qld/NSW border and a co-founder of the Country Party of Australia
Date: Newest first | Oldest first

READER COMMENTS

Rational Ag Policy
20/06/2014 5:01:32 PM

Peter, could you please disclose your return of asset over the last 10 years including capital growth. If its <10%, stop whinging. If you earned less than 6% including capital growth then sell up to one of the 25% earning <10%. If over the last 10 years you have made <6%, it is clear you and your management ability is the problem, because despite what you may assert, good farmers have managed to make money. These good farmers are the bright future of farming in Australia.
pepper
8/05/2014 2:25:24 PM

Pete, a good hit at raising a few issues.... here's an idea that will appease the free marketeers, and oppoagries on this forum..... put GST on all food sold through a supermarket....this should balance the books when our remaining farmers hang up their chiphoe and put their hand out for the social security support. Seethelight might explain why GST shouldn't be applied to food. Freshy, you describe the problem of vertical integration and cross subsidy by the big end of town: where is the balance of market power for our primary producers.
Consolidated
8/05/2014 8:21:00 AM

Farmers are not special and those that focus on their image miss the point. Farming is a business with opportunities in front of it. If you want farming without opportunity then we go back to the days of Stalin and agrarian socialism where you have no choice in how you farm or the profits you can make and misery is shared equally. Beware of aspiring agri politicians who just tackle these populist issues. These individuals care more about their future in politics than you or me.
Vic B
8/05/2014 7:28:05 AM

When you are a price taker and not a price maker with a perishable product you have no power over your income. If ever there was a global calamity, the 90% of people who live within 50k of the coast in cities would find out the hard way of our importance. Those cheap foreign products, whose purchase keeps people in the latest fashions, ciggies, booze and the TAB, along with the all-important shareholders dividend, are at the expense of our food producers. We are not owed a living, but we certainly are not owed the disrespect we get from govt. greens and consumers.
daw
7/05/2014 8:29:08 AM

So Had a g*what about all the eternal unemployed who live on social security payments? They aren't owed a living either but they get one given to them. And they do absolutuely nothing to earn it. At least farmers are gainfully employed trying to make one. I ask what 'handouts' are they given? I have farmed for 40+ years I haven't had any and never ask for any. So don't put everyone in the same basket Your intolerance is only exceeded by your ignorance. We are in business to make a profit but by providing quality fresh food that many other countries run short of.
Had a gutsful of whinging farmers
5/05/2014 11:25:39 AM

Here we go..farmers deserve more than the average taxpaying hardworking Aussie because...well they are a farmer. Enough of the 'we feed the world' rubbish. You are in farming to make a profit, you are in business like any other person. Stop the handouts because guess what you arent special people. Enough handouts. Enough special treatment. Society owes you NOTHING.
LTF
5/05/2014 9:36:25 AM

Truth is it is not farmers who are getting a free ride. It is the farmer who is made to carry the huge cost burden of regulations which transfer income away to others in the supply chain and input cost sector. Probably at least 30% of our income is stolen by others in the community via such regulations as artificially high labor costs. Take those away before you start counting any assistance to farming of which there is virtually nil..
wtf
5/05/2014 9:29:01 AM

no body is owed a living but if the population want to have affordable food into the future they need to put some money away for a rainy day. Subsidies in other countries means we have declining profit margins, if these become too low the industry will not self replace, hang on is that not happening today?
Farmer Brown
5/05/2014 9:08:37 AM

The wool price boom in 1972 saw my father clear his debt with the local stock agents. It couldn't happen today because they don't help their clients anymore because of this profit driven economy which sees companies charge interest rates at 17% or better on overdue accounts. Share prices are more important than producers. Banks lend money to farmers on figures which obviously add up at the time, so why if due diligence is used at that time do these farmers end up being sold up? We need a level playing field for all and to stop overseas countries dumping excess produce in Australia.
NSW wheat grower
4/05/2014 3:41:46 PM

Farming has to be treated different than other industries because the marketers of our commodities scalp the potential profits away. I wish the WEA had been retained to claw back some much needed control in the wheat industry. Since its winding up every multinational known to man is buying our grain and setting up shop. It shouldn't be like this. Mailler will learn from his mistakes in that argument as he continues to argue for a profitable ag sector. Keep fighting!
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Burrs under my saddlePete Mailler is a farmer on the Queensland/NSW border. His perspective and opinions are borne from seeing more than one side of many problems in his various farm leadership roles and in wanting to ensure a future for his children in agriculture.

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