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

RLX
13/06/2014 6:40:27 AM

As I am a keen observer of the livestock market I am interested to hear any views Senator O'Sullivan may have on the free-market status of the livestock industry. Does the Senator believe or suspect any market manipulation is occurring within that sector?
CMF
13/06/2014 6:53:06 AM

Has any one here ever been to a fat lamb sale and seen most of the lambs sold on one bid auctions. This is competition?
LTF
13/06/2014 7:21:16 AM

Even in the bastion of free enterprise, USA, there are limits on the size to which a bank may grow in terms of market share. Australia says it is for true competitive forces but has no plan to ensure that Corporations do not take over whole market segments killing off competition without ant legal impediment. aka Coles (Wesfarmers) and Woolworths. Or GrainCorp, Cargill, Big 4 Banks etc.
GFA
13/06/2014 7:30:34 AM

We have the worst kind of free market capitalism. That is all of our businesses, including farmers, are forced to derive their income at open 3rd world, global market rates while being forced to pay for all their input and supply chain costs, (including power, transport, packaging and handling, and services), at inflated non market rates regulated via such laws as the Industrial Awards and statutory utilities organisations. Under such an anti business scenario, The Nationals can not be blamed for seeking Govt intervention to stop total destruction of our asset and wealth creating industries.
Deregul8
13/06/2014 7:41:45 AM

Out with the conspiracy garbage again LTF. Take a cold shower, cob. There are laws that dictate how corporations can act. If those laws are corruptable, why the hell on this earth would you want a market over-regulated by government. I tell you these agrarian socialists are a confused bunch and if allowed to gain political power will lead us all back to the gulags. Wake up and smell the roses. The opportunities you have now will never be present in a world where big government exists. If you are failing in the current system, you might as well give the game away.
Geronimo
13/06/2014 8:37:00 AM

Deregulation did not spawn supply chain oligarchs. Farmers did when they sold-off the supply chains they owned.
Bushie Bill
13/06/2014 8:52:33 AM

"It has enabled large, multinational corporate gorillas to break free of their zoo cages, tip over the pie van and climb up the flagpole" says the good Senator. My god, where did this bloke receive his education, particularly his understanding of economics? Was it the Joh Bjelke Petersen School of Agrarian Socialism? Propping up a bunch if inefficient lifestylers milking cows in Queensland does not serve the interests of the people of Australia, does it?
wtf
13/06/2014 10:38:46 AM

free markets are a free for all to rip exporters off.
argis
13/06/2014 11:18:33 AM

D8, you have been called upon many times to prove you are truly the free market believer you claim to be. So far you have failed, because you never attack, the most costly socialist Government Regulation that exists in Australia. When will you really show your true colours by attacking Australia's Industrial Awards? All you attack are the existing farming entrepreneurs on your shallow and fake pretext that they are seeking Government guarantees for their livelihoods. Nothing could be further from the truth.
eric hunt
13/06/2014 11:34:06 AM

Bushie bill is the Clive Palmer of this site. It never adds any value or rationality to anything. All it ever does is express its personal bile and hatred in pursuit of revenge of any person it thinks has ever questioned its selfish and unrealistic ideas.
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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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