Agriculture a price-absorber

26 Jul, 2007 07:00 PM

WICKEPIN grower Kevin Pauley has put forward an advanced economic argument to raise public awareness about the critical role Australian agriculture plays in the national economy.

Mr Pauley believes Australian agriculture absorbs constant prices rises from other sectors of the economy, but its moderation of inflationary pressure and general deflationary effect on the overall economy has not been properly recognised.

³I am tired, as is everyone, about the fact farmers can¹t pass on their rising input costs directly, in the same way government, business and labour does,² Mr Pauley said.

Mr Pauley, who has been farming wheat and sheep for 47 years, said his point needed wider recognition so the concept of agriculturally- induced deflation could be examined and argued more substantially.

He said it was important to raise awareness among the farming and business community because Australia¹s unsupported agriculture was unique in the world for its deflationary role in our national economy.

³This arises because of its unsupported nature,² he said.

Mr Pauley said some experts claimed the agriculture sector comprised roughly 3pc of Australia¹s economy while the Australian Farm Institute, whose role is to enhance the economic and social wellbeing of farmers and the agricultural sector in Australia, put it closer to 12pc.

He said no matter which way it was analysed, there was no doubt that the agriculture sector absorbed inflationary pressure.

³Australian agriculture absorbs constant price rises from the business, government and labour sectors in this country yet it passes nothing on,² he said. ³They all sing a chorus from the same song book, which is: we must pass on our rising input costs.

³The increase in prices received by farmers happens in a trickle down fashion.

³All price increases are absorbed in the hope this trickle, coupled with increased productivity, which is our only tool, will sustain Australian agriculture.

³It is perfectly normal and acceptable for the rising costs of business, government and labour to be passed on.

³Along with increases in the national money supply, these factors generate inflation.²

Mr Pauley said he believed the agriculture sector, in a completely unacknowledged and uncompensated way, reduced Australian inflation.

³So many people like to sink the boots into agriculture, especially editors of daily Australian newspapers, but none of them acknowledge that inflation in the economy is being moderated and reduced by farmers,² he said.

³Australian Treasurer Peter Costello often mentions the effect of the drought on national productivity and the Australian economy.

³Mr Costello will often say the economy is growing at a certain percentage but has been red-uced by a certain margin because of the drought.

³But never has the deflationary aspect been recognised, nor has agriculture being rewarded in any way for it ‹ the treasurer only speaks of lowered national growth as an effect of reduced agricultural output.²



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