Government policy failing farmers

Government policy failing farmers


THERE has been a national failure in farm policy, with the net value of farm income flatlining and debt wound off the clock.


THERE has been a national failure in farm policy, with the net value of farm income flatlining and debt wound off the clock.

That was the key message from economist Ben Rees at the Agriculture in Crisis meeting in Merredin on Monday.

According to Mr Rees, major monetary and deregulatory policy formulated by all major political parties over decades had significantly disadvantaged the farming sector.

And while the WA broadacre grains industry was experiencing hardship, it was not confined to one State or commodity - it applied to the national agricultural sector as a whole.

Mr Rees said government policy had not adjusted to the changing structures of farm productivity, with free trade and deregulation holding the key to change.

A fundamental reason for the failure of national farm policy was monetary policy which had emerged from a conflict in fundamental economic knowledge.

"It has been evident since the introduction of supply-side economics introduced by retrospective prime ministers (Bob) Hawke and (Paul) Keating in the 1980s," he said.

"When we formed the Cairns group in 1986 you got this hairy-chested notion that we were going to show the world how to farm, we were going to put them out of business on efficiency and productivity."

According to Mr Rees, supply and demand models had shaped farm policy and meant failure, which he attributed to the Engel's law, the notion that a rise in income means a decline in demand for food in the budget.

He cited this as a feature of a modern expanding economy and said as the economy had grown, living standards had risen which had occurred at the expense of the farm sector.

This meant the farming sector had lost out as the demand for food diminished.

Mr Rees said rural debt began to cross over with gross farm production in 2003-2004 which was a stark contrast to the position in the 1980s where rural adjustment had been implemented.

He said the growth value and the net value of farm production illustrated how an increasing volume of farm production had been distributed away from the farm sector which he believed needed to be addressed.

He said deregulatory policy was also a prominent reason for farm policy failure in Australia.

He said governments had had encouraged monopoly power domestically while asking farmers to sell into a deregulated market.

"If anyone thinks they can solve the problems of rural debt in rural Australia with the rural reconstruction model of the 1970s and 1980s they're in Disneyland," he said.

"You have a very different banking system in operation now."

Mr Rees said debt had risen and a fundamental failure to address the problem reflected badly on all major political parties.

"Agriculture has been left with a result by governments of incompetence at worst and negligence at best," he said.

"A rural reconstruction model won't work, we need to address debt with a new model.

"So if you expect to solve this fundamental problem at the farmgate level you'll fail, because you will have to do something about the financial sector first."


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