No civilisation in history has survived long after it foregoes the importance of the economic viability of its agricultural production base.
Australia is one of the few countries that expects its agricultural producers to subsidise consumers domestically and internationally, by being forced to compete without support in domestic and international markets against products that are heavily subsidised in their country of origin.
The aggressive trade liberalisation ideology pursued by consecutive governments and supported by the National Farmers Federation over the past two decades has severely damaged rural industries and their communities. Farm debt is steadily increasing while net farm incomes are not increasing with this debt. This trend demonstrates market and public policy failure in the agricultural sector.
The result of successive governments’ deregulation of agricultural marketing arrangements has shifted market power to the post farm gate sector of the supply chain and moved profit in agriculture away from producers. This trend results from the failure of agricultural market reform in Australia to benefit to the production sector.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), continually forecasts a bright future for Australian agriculture based on potential increasing demand due to a combined increase in population and increasing affluence in key markets. Fundamentally though, the reality is that no central government in the world wants food prices to increase and the majority of the population growth is unlikely to be able to pay even the true cost of production for their food let alone a profit on top of that.
Engel’s Law is an economic observation explaining that the proportion of income consumers spend on food does not increase in line with their increasing income. This phenomenon belies the notion that agriculture will benefit proportionately from increasing affluence. Compounding this problem is the fact that agricultural production costs increase disproportionately more than either increases in agricultural commodity prices or productivity growth.
The agricultural economy will always fall behind the broader economy under the free market mentality that economic rationalists have so fervently and recklessly pursued. Free marketers are killing Australian agriculture and by extrapolation, rural and regional Australia and all industries that feed off it.
There is a public and politically promoted notion that it is the role of Australian farmers to meet the increasing global food challenge. The reality is that Australian farmers are business people and their primary obligation is to feed, clothe and educate their own families and those who work for them. This is becoming increasingly difficult. If society generally wants Australian farmers to feed the world then there needs to be a strong market signal sent that underpins the economic success of current and future farmers.
The rural and regional economy of Australia is increasingly dependent on farmers’ prosperity. Similarly, as the resources boom begins to slow, the national economy is dependent on the export of Australian produce to bring in export income and provide a major injection of capital to the broader Australian economy to underpin sustainable economic growth.
In response to the issues raised above CountryMinded will seek meaningful reform that will:
- Reform production and market disruption support to Australian farmers;
- mandate biofuel use in Australia;
- mandate the allocation of premium shelf space in supermarkets for Australian produce;
- enhance truth in labelling legislation to provide transparency of country of origin;
- underwrite a national multi-peril crop insurance scheme to mitigate production risk;
- implement fiscal policy that puts downward pressure on the Australian currency and interest rates to improve the sector’s international competitiveness;
- stimulate investment in infrastructure;
- implement WTO compliant countervailing duties to protect Australian producers and manufacturers where they are unable to compete with subsidised imports;
- ensure adequate biosecurity conditions exist on imports and properly resource quarantine and inspections services;
- establish the Australian Reconstruction and Development Board or other rural industries development bank;
- establish novel Government supported investment models to facilitate generational equity transfer;
- reform competition policy to address asymmetry in marker power;
- support the live export industry; and
- Increase irrigation water to agriculture in the Murray Darling Basin to appropriately balance the socio-economic priority for communities in the basin.