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

GFA
24/06/2014 7:14:46 AM

You have now confused even yourself PAYG. I claimed all along that the Govt deliberately plotted the downfall of the AWB Single Desk. They started that process in the 1980s/90s. With or without the WIF Levy issue you bang on about, Govt could not care less for the SD. In one comment you state opposition to Government involvement in industry. Then in another, (to Dalby), you say you supported the single desk for wheat before WIF. So in one statement you support Govt involvement in industry and in another, you oppose it. Haven't you contradicted yourself old chap?
PAYG
24/06/2014 6:25:57 PM

GFA – the single desk was government intervention that established a government ‘Monopoly Marketing’ scheme that commenced in 1939, some 30 years before I was born. The marketing scheme turned on the ‘Compulsory Acquisition’ by the government of all the Wheat, and later on only Wheat destined for export, to establish the monopoly business. The Govt, thru the Single Desk, then took control of the commodity and traded it, domestically and internationally, with the proceeds going back to the growers to comply with ‘on just terms’ as the guarantee states. It’s ‘Eminent Domain’ mate.
GFA
25/06/2014 8:16:40 AM

A jaundiced interpretation of the AWB single desk marketing system by someone who was still just a kid, by the time the AWB had been in place 50 years, PAYG. Not sure what your point is? It appears to have little to do with the debate we were having about the benefit or otherwise of the AWB Single Desk system, or when it was put on the skids. The fact still remains that, when SD was cancelled, it increased the number of export sellers here from 1 to some 30,000. At the same time there was little change to the number of end user clients for our wheat. Goes against all good marketing sense.
Dalby
25/06/2014 12:58:57 PM

PAYG, the government did not take control of the commodity and trade it, as you state. The Wheat Marketing Act allocated that task to a group of farmers elected/nominated by growers. If it had been the Government as you suggest, then it would have been the PM, Ministers for Ag and Foreign Affairs and Trade before the Courts over the Iraq Oil for Food Inquest and not the Board and Management.
Deregul8
25/06/2014 1:54:08 PM

Unfortunately PAYG, the Ag Socs do not see their affliction as dangerous to their wealth and that of their peers. For those of us with open eyes, we see the greatest risk to industry remaining profitable as bigger government and constraints on free market enterprise. Austrian economic principles are the only way to build sustainable industry. Ignore the rhetoric of the sycophants for pretty soon they will realise there is no warmth in their gulags and the free market wasn't such a bad place after all.
PAYG
25/06/2014 2:51:21 PM

Dalby – Quick you had better tell that to DAFF: - “......... The AWB did not purchase wheat as the Wheat Stabilisation Act and subsequent legislation provided for the compulsory acquisition of all wheat produced in Australia. Even after the deregulation of the domestic market in 1989 removed compulsory acquisition for wheat consumed within Australia, it has remained a fact that virtually all Australian wheat destined for export must be acquired by one organisation.” - http://data.daff.gov.au/data/ware house/pe_abarebrs99000909/PC12517 .pdf
Dalby
25/06/2014 3:00:14 PM

You did not read PAYG's comments deregul8. PAYG states he was a supporter of the Wheat Single Desk. It was only the WIF transfer for AWB listing he opposed.
tim from oakey
25/06/2014 3:10:56 PM

Deregul8, if you think the noodle wheat price change has anything to do with deregulation you are kidding yourself. If you think that supply demand changes have not occurred in your favor, you are also kidding yourself. If you think that you are getting more for export wheat by adding 30,000 grower export sellers to the market place, with basically the same number of end user buyers, you are truly delusional.
LTF
25/06/2014 3:16:42 PM

Deregul8, how two faced are you. You preach ideological deregulation and yet you favor the most draconian entrenched regulation of non market based industrial awards, possibly in the world.
PAYG
25/06/2014 3:18:21 PM

GFA - The point - AWB, acting as a Government monopoly organisation under the Single Desk, traded in the physical commodity – Wheat – and the Government guaranteed grower payments because the Constitution guarantee’s compensation where there is a compulsory acquisition of property. – I think that you are about done, btw, did you check out whether levies are taxes & did you check up on the WIF & did you work out how a Statutory Authority could list on the ASX & did you ever have a clue what you were talking about & next time how about you mine your own business, you’re not Barry mate ?
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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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