RURAL AFFAIRS: by Patrick J. ByrneNews Weekly
Confronting the myths about agriculture
, July 16, 2005
Free market-inspired myths have led to policies that are seriously damaging Australia's rural industries. Pat Byrne exposes nine of these myths.Free market-inspired myths about agriculture have led to policies that are seriously damaging our rural industries. For over two decades, farmers and the public have been told the following:MYTH #1: The primary market for rural product is the export market. Hence, farmers have to accept the agenda of National Competition Policy to deregulate agricultural industries, tariffs, irrigation water, etc., in order make farmers become more efficient, so as to compete better on world markets.
In reality, the primary market for most of Australian agriculture is the domestic market. As Dr Mark McGovern, an economist with the Queensland University of Technology, has shown, we don't export 80 per cent and consume 20 per cent or rural product. We export around 30 per cent and consume about 70 per cent.
Even for most commodity export industries - like meat, wheat, sugar and dairy - their biggest single market is the domestic market.MYTH #2: If only Australia can lead the way for the rest of the world in cutting subsidies to farmers and adopting free-trade policies, then the rest of the world will follow and our farmers will benefit from a huge boom in exports.
Hence, in the late 1980s, Australia led a group of developing nations to form the Cairns Group, to pursue the abolition of all subsidies and promote free trade in world agriculture. This was done in the run-up to the evolution of the General Agreement on Tariffs and Trade (the GATT) into the World Trade Organization (WTO).
This campaign failed because both the GATT (1947) and the WTO (1994) treated agriculture as separate from all other forms of production and trade. They recognised that farmers had no market power over the price of their inputs or their outputs, leaving them vulnerable to exploitation, particularly by processors and powerful supermarkets. The WTO Agreement on Agriculture (1995) confirmed five areas in which governments could assist farmers.
Today, Australia is still pursuing free trade in world agriculture, when the US, EU and Japan say they want to expand production and protect their farmers. It's not going to happen.MYTH #3: Australian farmers must become more efficient and competitive to succeed on the world market and compete with cheap imports.
Yet Agricultural Policies in OECD Countries Monitoring and Evaluation, Highlights, 2003
reports that in the developed world, Australian farmers receive the lowest subsidies and the lowest farm-gate price, and our consumers enjoy the cheapest food.
In fact, farmers in other developed nations have a farm-gate price 32 per cent higher than Australian farmers, and their consumers pay 37 per cent more for their food than Australians.MYTH #4: Quarantine cannot provide absolute security against imported diseases, and that if we want other countries to buy our food, we have to accept their imports or they will challenge our quarantine rules in the WTO.
Yet the WTO states that Australia can have its quarantine bar as high as it chooses. It says, "... with Australia heavily dependent on agriculture and a major exporter of agricultural commodities and agricultural food products, which receive relatively little government assistance and are sold at world market prices, these [quarantine] measures are believed to be necessary to ensure that Australia's reputation as a reliable exporter of high-quality agricultural products is not jeopardised by pests and diseases." (WTO press release, September 25, 2002.)MYTH #5: Australia has to accept the closing of more and more of its fishing and timber industries for the sake of the environment.
As more of Australia's managed, sustainable timber and fishing industries are closed down, we are importing from countries where unmanaged exploitation of forests and reefs is causing major environmental destruction.MYTH #6: Farmers are only 3 per cent of the economy; that is why they have no political voice.
Yet the Australian Farm Institute report, Australia's Farm-Dependent Economy
(1995), showed that the farm-dependent economy - inputs, agriculture and output sectors - make up 12.2 per cent ($72.4 billion) of the Australian economy and 17.2 per cent of the workforce.
And how many time have farmers been told:MYTH #7: Why should taxpayers subsidise farmers?
The question should be reversed. Why should farmers have to carry unrepayable debts, get a second job, send their wives to work, use their children as unpaid labourers, and live on very low incomes to subsidise Australian consumers with the cheapest, safest food in the world?
For 20 years, farmers have been told:MYTH #8: Farmers should diversify their production, to get into niche industries.
But niche industries are by definition small with limited markets. They cannot replace large, commodity industries.
Australian farmers can produce anything. What they cannot get is a fair price for the products into the domestic market.MYTH #9: Australia can get by with a quarter of the number of farmers we have today.
Yet they now hear politicians saying that, if something isn't done soon, we will have a serious shortage of farmers in a few years time.