Farmers cannot stay in servitude

02 Nov, 2014 01:00 AM
When middlemen, retailers and particularly supermarkets are involved, farmers are the true pawns

THERE is a concept called responsibility. It means we are all answerable not only for our actions but also for the consequences of our actions. If we injure third parties, intentionally or not, we are responsible and we can be held responsible.

There is also Newton’s third law of motion: for every action there is an equal and opposite reaction. In the context in which I am writing, it means that we do not operate in isolation. If we consciously and deliberately do something, there will inevitably be consequences.

Tasmanian farmers, for all their worthy endeavours, for all their valour in helping to keep this economy moving, are often just pawns in a game, a game in which they can become innocent bystanders, the victims of other people’s actions.

I am reminded of this lack of market power and influence in the marketplace every day.

The federal government has promised to crack down on the imbalance in the market between those who produce our food and those who market it.

Agriculture Minister Barnaby Joyce wants Australian farmers to get more of the final retail price of what they produce. Historically in Australia, farmers have received as much as 90 per cent of the final retail price, but not any more.

The government’s green paper on agriculture confirmed that today farmers receive, on average, just 10pc of the final retail price of the commodities they produce. In many instances, they are being exploited by monopolies and duopolies further up the processing and marketing chain, held to ransom on price. They have no choice but to take the price being offered.

In launching the green paper, Mr Joyce said: “A farmer that gets between 10 and 15 per cent of the final price when they have done the majority of the work; (that) is inherently unfair”.

Another area where farmers become pawns in somebody else’s game is in industrial relations. A dispute develops between a business and its workers, a shipping line and its stevedores, a bank and its staff - and the wheels of industry grind to a halt. When that happens, farmers are in no position to leave their crops in the ground, to stop milking their cows, as they await settlement of the dispute. In farming, you use it or you lose it. You can’t put Mother Nature on hold until the barricades come down.

Farmers invest substantial amounts of money in producing crops to point of harvest. These crops are perishable and so must be harvested when ready - they can’t be held on farm, they can’t be stored and, as they may have been grown to one processor’s unique market specifications, it is unlikely another purchaser will be found. In any case, even if alternative customers could be found for some or all of the crops, the short nature of the notice would inevitably impact on any price received. Milk producers are equally challenged – with high levels of investment and a very perishable product.

Farmers have been watching recent discussions with respect to union expectations about future wage rises with great interest. Unions are seeking guaranteed increases at or above the rate of inflation because they say that employees should be given a ‘fair go’.

Farmers think they too are entitled to a fair go. They would like to receive a guaranteed price increase year on year above the rate of inflation, as many employees have done over recent years.

According to Australian Bureau of Statistics figures, the total increase in the national consumer price index (CPI) in the six years from June 2009 – June 2013 was 9.9pc. We know agricultural input costs rose more rapidly than the CPI because of the heavy industry reliance on imported goods and currency exchange rates.

Let’s look at just one example of how this has played out in the paddock. Growers of peas have seen a fall of 30.5pc in their contract price since 2009; and they are now $177 per tonne worse off now in dollar terms. These figures would of course be even higher if CPI were calculated at a compound rate; and the real rates of agricultural cost inflation and exchange rate variation were factored in.

Farmers produce our food; yet they are often at the bottom of the food chain, the last to be considered, when it comes to banking the proceeds of that production. They have to take what they can get when it comes to prices in the market. When middlemen, retailers and particularly supermarkets are involved, farmers are the true pawns.

Mr Joyce last week said that family farms are the cornerstone of rural and regional Australia. He added that “the way a nation treats its farmers is a litmus test of the political system”.

As it stands, the results of that litmus test are not very flattering to us as a wider society.

Jan Davis is chief executive of the Tasmanian Farmers and Graziers Association.

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jen from the bush
2/11/2014 5:10:43 AM

100%right on - now please do something about it. Never want to see again the overstocking, environmental and financial disaster created by LE ban by Ludwig etc. Helloo, where were the cattle to go? The mind boggles on the stupidity of people - And we were lucky our trading partners eventually started re-trading with us instead of paying us back with something like rabies or foot and mouth which actually shows that they are more mature than Au was then.
2/11/2014 6:43:26 AM

A worthy article - unfortunately this is the long term outcome of being wearing the 'you need to be a low cost commodity producer' badge for so long. As an industry we have backed ourselves into a corner with a smile on our faces and ignored whats been happening post farm gate to our peril. We need REAL innovation and REAL marketing and a REAL change to the supply chain, not the constant lip service and charade we see basically it comes down to the industry going through some fundamental change and working together or continuing down the same slippery slope
2/11/2014 7:08:07 AM

Barney talks the talk but doesn't walk the walk. Look at the inaction on the Senate inquiry on cattle levies, the inaction on Rob Moore's PPP bill. He is either incapable of sorting the problems or just doesn't want to. Look at the survey on this site about Barney, less than thirty percent think he is doing agood job
Mad Matt
2/11/2014 8:04:02 AM

Just goes to show that Australians that are not in rural areas have any respect for where or how their food gets to the table, we are the only nation in the world that does not protect its farmers we are the only nation that shows complete contempt for our food supply. The australian government are now mere pawns for big corp. Wake up aussies.
2/11/2014 10:18:05 AM

Somehow Australian (and other country) farmers need to regain control of their supply chains. Having the ability to benefit financially from all aspects of the production process, as well as the ability to move profit up and down the SC as required is one way to manage risk and move away from being a price taker. I often wonder why the owners of the base input, whether it is agriculture or mining, allow themselves to be marginalised in the SC? It is obvious that if you have limited buyers and many suppliers, the supplier is going to be squeezed.
2/11/2014 1:50:48 PM

So what is your point. A guaranteed price. Guaranteed by someone else. Errant nonsense that wont work. Typical though of much of Aust. agriculture. Have a big whinge proposing no real solution then run off to the Govt for a subsidy or a guarantee. Before you haul out the attack dogs i am a practising WA wheatbelt farmer.
2/11/2014 2:18:34 PM

Thanks Jan - for expounding the widely held and often communicated views of many in the rural community. I look forward to hearing your solutions in this post commodity regulation era.
Bushie Bill
2/11/2014 5:23:03 PM

I hope Jan reads the Sam Collier article, and repents. Btw, the Boof may well have said “the way a nation treats its farmers is a litmus test of the political system”. If he did he was wrong. It is the way a nation treats its underprivileged and disadvantaged is the litmus test of the political system. Get it? the underprivileged and disadvantaged, not the pampered and cosseted whingeing farmers who believe they are owed a living regardless of their own contribution!
2/11/2014 8:39:37 PM

The question that needs a rationale answer is: 'Why do Australian Farmers only receive 10% of the retail price when they take 95% of the risks and real costs ?' We keep hearing the bleating of the woolly thinkers baaing for higher productivity, more efficiencies, more regulation costs to be against the producers, but isn't it time someone raised the incompetent and nonsense driven marketers and middlemen contribution to the cost of produce? If retailers want more checks and regulation for their litigation mitigation or target sales, shouldn't they pay instead of the already poor producer.
3/11/2014 8:25:14 AM

Myopia or tunnel vision, Bill? Did a squatter run over your dog? Many of the lowest income areas are rural. Lack of schools & medical facilities, shorter life spans. Disadvantaged is easy to find if one opens ones mind & eyes. By screwing one section of the community you don't improve those around them.
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