February 10th 2001

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Articles from this issue:

Cover Story: US power crisis - is this where we're heading?

Editorial: Why family farms are at risk

Western Australia: Much at stake in WA poll

Queensland: Election outcome difficult to forecast

Agriculture: Inquiries to look at AQIS apple decision

Canberra Observed: Family trusts - will government bite bullet?

Straws in the Wind

The Media

Letter: Manifesto important

History: The real Frank Hardy?

Comment: Pollies protest too much Comment: Pollies protest too much

Victoria: Bracks' new social engineering Bills criticised

United States: Bush moves promptly on abortion funding

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Editorial: Why family farms are at risk

by Peter Westmore

News Weekly, February 10, 2001
Despite the Prime Minister's commitment last year to the needs of rural and regional Australia, the push to reduce government assistance for family farms continues apace in industries as diverse as wheat, dairying, wool and irrigated crops, while Australia's apple and pear industries face the unresolved threat from fire blight-affected New Zealand.

The latest salvo was fired at the wheat industry by the National Competition Council, the body which has pushed national competition policy on rural communities throughout the country.

Its president, Graeme Samuel, has called for complete deregulation of wheat marketing, and denounced the Australian Wheat Board (AWB) over its strong support for the maintenance of a "single desk" for wheat exports.

For some 60 years, the AWB has successfully sold Australian wheat into overseas markets, now exporting about 18 million tonnes a year.

This success has been achieved despite massive subsidies given by several other major cereal exporting countries, including the United States and the European Union.

The scale of foreign subsidies for their agricultural industries is incredible.

The web site of the UK Government's Scottish Office lists direct subsidies for a number of agricultural industries in the UK, alongside net farm income. For cereal producers, it says, net farm income in 1997-98 was just £4,511 ($A11,870), but this was topped up with an average direct subsidy of £33,110 ($A87,000).

The Weekly Times newspaper recently reported that total direct assistance to US farmers under the six year 1996 US Farm Bill has averaged $9 to $10 billion a year. In the year 2000, subsidies almost topped $28 billion making up 50 per cent of average farm incomes.

Despite this, the new Chairman of the US Farm Bureau Federation, Bob Stallman, was recently reported as saying that existing supports were "woefully inadequate", and needed to be doubled (Weekly Times, January 24).

Despite the rhetoric by Australian officials to the contrary, there is no sign that the new Bush Administration will cut farm support programs in the US. In addition to US Department of Agriculture direct payments to farmers, the US Government's Conservation Reserve Program keeps the price of farm produce high by paying farmers to keep part of their land idle.

Unlike Australia, which deregulated the domestic sugar industry some years ago, the US gives a guaranteed price for sugar and limits the amount of sugar which can be imported into the US.

Throughout Western Europe, the Common Agricultural Policy (CAP) continues to support agricultural prices, protect markets and provide export subsidies.

The Japanese government is even talking about turning over some of the country's golf courses to potatoes, in an effort to make Japan more self-sufficient in food production (Financial Review, January 6-7, 2001).

The embattled Australian dairy industry, on which deregulation was imposed by the Howard Government in 1999, now faces a new challenge with the imminent introduction of the cut-price supermarket chain, Aldi, which sells generic brands. This will undoubtedly increase price pressure on dairy farmers, who have seen the Coles and Safeway supermarket chains slash the farm gate price of milk, and market their own low-cost generic-branded milk.

In contrast, under the US Dairy Market program, the US government simply sets the price for milk at a level which keeps dairy farms viable. A 1990 study published in the US Journal of Consumer Affairs found that the dairy market program costs American consumers over A$1.5 billion a year.

In the long-suffering wool industry, both state and federal governments are completely paralysed about efforts to stop the spread of the exotic OJD sheep disease, which entered Australia about 20 years ago, and has driven some of the country's best wool producers and sheep studs to the wall. Further, wool classers are in uproar over plans by the Australian Wool Exchange to force them to undergo costly inservice training, which receives no government support. This cost will eventually be passed on to sheep farmers.

And farmers with irrigated crops - including fruit, cotton and rice - are now expected to pay what are called "market prices" for irrigation water, while plans to divert water from the Snowy Mountains scheme back into the Snowy River will lead to reduced water flows into the Murray-Darling basin.

Far different is the policy adopted by governments in Western Europe, the US and Japan, which have increased their levels of support for agriculture over recent years, despite continuing pressure from the World Trade Organisation (WTO), free market "think tanks" and others.

The reason why these countries continue to support farming is partly economic, but principally social.

Unlike Australian governments, they regard a thriving rural sector as necessary for social stability, and see that viable family farms are essential for maintaining a balance of population between metropolitan and regional areas.

Despite our politicians' rhetoric, the harsh reality is that governments in Australia are simply standing by as family farms bleed to death.

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