Free market free-fall

Farmers' futures are tied to the whims of the supply chain oligarchs that deregulation has spawned

THERE is a secret club that speak only in hushed tones within the hallowed walls of Federal Parliament.

Fearful of being ‘outed’ by our Coalition colleagues, we have considered creating a secret handshake, a secret password and a secret code of ethics.

I am speaking about those members of the Coalition that do not blindly salute the flag of the free markets.

We are certainly no strangers to this debate. The pros and cons of economic rationalism have been debated for several decades.

However, while in its ideal, it refers to the reduction of government intervention in the economy in favour of enabling ‘market forces’ to organise economic activity, the reality has seen the biggest players get bigger at the expense of the remaining supply chain.

While it may be uncomfortable territory across the political divide, it is a fundamental dispute that must be debated in the push for a strong agriculture sector that is positioned to capitalise on the burgeoning overseas opportunities.

In recent weeks, some commentators have argued that stances taken by The Nationals, especially in regards to selling state assets and collective models of ownership, is hypocritical and wrong footed.

But to suggest that market forces should simply be allowed to dictate the trajectory of rural industry and, with it, public policy, ultimately becomes a disservice to people across the agriculture sector.

More than a decade of deregulation across several agriculture sectors has not resulted in the monetary gains at the farm gate level that were promised.

Instead, it has emboldened many multinational corporations to stifle competition and, with it, any criticisms of their unbalanced and unprecedented market power.

It has enabled large, multinational corporate gorillas to break free of their zoo cages, tip over the pie van and climb up the flagpole. Rural representative groups, the Australian Competition and Consumer Commission, multiple Senate inquiries – there are many trying to clean up the aftermath from the gorillas' ongoing rampage, but no-one is ever going to convince them to get back in the cage.

Philosophically, a free market can only exist when there is freedom of choice, transparency of transaction and the existence of true forces of supply and demand. Proponents of free market policy in agriculture simply like to go to bed and not think about what is happening so that when they wake up in the morning, it is done.

The winner is the last man standing. Disregard that there was no transparency, no choice and no freedom.

Can anyone seriously claim that Queensland dairy farmers currently enjoy an open, transparent and most importantly, free market – one indeed with freedom of choice?

Dairy farmers wanting to provide their fresh product to the general marketplace realistically only have one choice – they can supply their milk to (mostly) foreign owned processors that will most likely place the cartons on the shelves of either Coles or Woolworths.

There is no transparency, there is no freedom of choice and there is certainly no tension of market demand.

If farmers challenge or protest the price they receive, the supermarkets can always just truck milk from the southern states into Queensland.

Currently Queensland Nationals are vocally opposing Wilmar Sugar’s proposal to remove itself – and 60 per cent of Australia’s sugar - from the century-old national marketing system. Due to deregulation, Wilmar can claim its participation with Queensland Sugar Limited (QSL) is only voluntary.

Wilmar does not need to concern itself with the impacts its decision will have on the family cane farms that do not supply its mills. Wilmar does not need to concern itself with the long term viability of the Australian sugar industry.

Of course, business should be encouraged to make its own decisions and profit should be both the focus and the reward for sound management. Government should always work to encouraging this situation.

But when the collective fortunes of any industry are so intrinsically linked as is the case with agriculture, businesses also have an ethical responsibility to ensure viability across the supply chain.

Our rural industries are facing the challenge of maintaining competitive advantage and driving productivity gains within rapidly expanding and changing global markets and operating conditions.

Australia’s future productivity and prosperity is closely tied to our ability to maintain our position as a world leader in the management and production of our sustainable resources, especially across the agriculture and mining sector.

The dual imperative of raising productivity and workforce participation is fundamentally changing the required skills and knowledge required for the agriculture industry.

If industry is to achieve these imperatives, workers will require new skills and deeper knowledge, including higher level technical and innovation skills.

This requires money - at a time of falling profits at the farm gate.

Australian farmers are price-takers. This means their futures are often tied to the whims of the supply chain oligarchs that deregulation has spawned.

The market does not always get the balance right. Responsible policy debate should recognise this and adapt accordingly.

If that means critics will accuse me of being an agrarian socialist, then I suppose it is a flag that I will proudly salute.

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FarmOnline
Barry O'Sullivan

Barry O'Sullivan

is a Queensland-based Senator for the Liberal National Party
Date: Newest first | Oldest first

READER COMMENTS

Jacky
13/06/2014 12:47:02 PM

Barry, you can take a populist stance here - but they are just words thrown to the faithful. But what are you going to do? What will you achieve?
Dickytiger
13/06/2014 8:14:46 PM

Barry knows as much about markets, especially free markets, as he knows about the sexual habits of a barbers pole worm.
Love the country
14/06/2014 7:27:29 AM

Free market, I have been providing sheep to midland and now Muchea sale yards for over 50years and the prices have been an absolute joke, so the response from the young farmers now is call in the carriers, result, prices rising nearly 70 percent. People are still buying meat, they have to realize we have an odd price rise in 50years.I have no sympathy for the wholesales as if they had paid a fair price all along, the sheep numbers would still be here. You do get tired of providing cheap product .
PAYG
14/06/2014 8:56:59 AM

Barry…….Barry……where to start ? – It was ‘government intervention’ that led to the destruction of the Wool job with the introduction of the ‘reserve price scheme’ that failed – It was ‘government intervention’ that ultimately led to the demise of the ‘single desk’ in allowing AWB to publicly list on the ASX using $365 million in growers levies (tax) – It was ‘government intervention’ that led to the demise of countless small meatworks and an increase in concentration of a small number of large meatworks under the current RMAC structure - how’s that working out Barry ? Homework mate.
GFA
16/06/2014 10:37:09 AM

PAYG, your facts are totally incomplete if not hopelessly off the mark. Your conclusions are even less legitimate and obviously reached solely via blind ideological bias.
PAYG
16/06/2014 11:32:52 AM

GFA – So point to the incorrect bits, mate. Was AWB allowed to list on the ASX or not? Did they use $365 mil of growers levies or not? Did government intervention lead to the collapse of the wool industry under the reserve price scheme or not? Is the current RMAC meat & livestock structure the bees-knees of coercive collectivism or not? – your call comrade. There’s nothing ideological about the truth mate, so it’s time to substantiate your b/s.
GFA
16/06/2014 1:16:20 PM

You are the one telling the b/s stories PAYG. The wool reserve price scheme was not Government inspired. It was woolgrower inspired. The Government just did what the wool growers asked. It was pure greed by the leading wool growers that held the price up for too long in arrogant denial of market forces. The Government only stepped in when it became clear that the wool growers had lost the plot. It was the Govt shooting holes in support of the Single Desk, from 1988 onwards, that led to the weakening of the AWB and its eventual demise rather than the ASX listing event.
leon tanner
16/06/2014 3:12:03 PM

Facts can be correct without being relevant PAYG. By the way, you give away your ideological cover by calling a person "comrade". Pretty childish eh?
strawman
17/06/2014 5:51:57 AM

PAYG, I take note of your point, I have always been surprised that govts seem to have impunity to be accountable. AWB was not allowed to alter its systems and the same with the live trade, as if producers do not matter. Im guessing its not the govt, rather the individuals in govt which have power in their parties. Hopefully today's mob will prove better than those of the past. If we knew how these people were manipulated, we as a society could change the ways this occurs.
PAYG
17/06/2014 8:37:10 AM

leon tanner (aka - GFA) - "By the way, you give away your ideological cover by calling a person "comrade"." - Fair-dinkum mate do you operate in some sort of parallel universe ? What 'Ideology' are you talking about ? Is it that I'm not a 'Socialist' that concerns you, or that you are and want everybody else to be one as well ? Now let’s talk about your 'Irrelevant Facts' mate or better still, where have you seen before 'Facts' that are not correct ? – Gord save us from all the idiots.
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Bush mattersBush matters - LNP Senator Barry O'Sullivan tackles the issues facing Aussie primary producers and people across rural and regional Australia.

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