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
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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.
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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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