May 14th 2011

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Articles from this issue:

EDITORIAL: The death of Islamic terrorism?

CANBERRA OBSERVED: Can Julia Gillard deliver on her three core commitments?

NATIONAL AFFAIRS: Growing anger at supermarket price war

NEW SOUTH WALES: NSW Liberals set new course

CHILDCARE: Exposing the lies in the childcare funding debate

RESEARCH PROJECT: Australia's food security under threat

CARBON TAX: Remorseless killers of our industries and jobs

MILITARY: Dispatching women into frontline combat

MARINE SCIENCE: Bluefin tuna: an endangered species?

FOREIGN AFFAIRS: Prime Minister Gillard kowtows to China

CHINA: China's economy at risk of debt crisis

UNITED STATES: PC intimidation threatens the rule of law

HISTORY: The long debate on how to alleviate poverty

IMMIGRATION: The vexed question of illegal immigration

OPINION: An inglorious tale of guile, envy and deceit

BOOK REVIEW: The deceivers and the deceived

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Australia's food security under threat

by Patrick J. Byrne

News Weekly, May 14, 2011

Please help Australia’s food security research project. The National Civic Council and AusBuy are together seeking financial support to commission a research project on the threats to Australia’s food security.

The research project is to be headed by Dr Mark McGovern, lecturer in the Queensland University of Technology’s school of economics and finance.

The project, to be conducted in several stages, aims to examine the ongoing, serious decline in farm profits, and the likely prospects for Australia’s export and domestic agricultural markets.

Australia’s rural industries are in the grip of an ongoing crisis:

• The sheep flock has fallen from a peak of 170 million in 1990 to only 68 million, its lowest numbers since 1905.

• Dairy production is down from its peak of 11.2 billion litres (2001-02) to 9 billion litres currently.

• Sugar-cane production has fallen by around 25 per cent as farmers have quit the industry.

• Australia is now a net importer of horticultural products, whereas it was a net exporter only a few years ago.

• The fishing industry is increasingly being restricted to catches far below world standards for sustainable fishing.

• Wheat tonnage and beef numbers fluctuate, but neither are returning the profits they once provided for farmers.

And it’s not just the long drought, then the floods, that have caused this decline.

Preliminary research by Dr McGovern shows that the average profit of Australian farmers has been declining for decades, and if the long-term trend is allowed to continue, profits will shrink to near zero in a few years time (News Weekly, May 16, 2009).

Many professional farmers — once capable of keeping their families, employing other farm workers and supporting their communities — have been reduced to the status of “hobby farmers”, with the farmer and/or his wife having to work on off-farm jobs to subsidise the farm. Farmers now subsidise putting food on the plates of Australians.

Importantly, earlier detailed research by Dr McGovern found that, contrary to the persistent claims by the National Farmers Federation (NFF), the Australian Bureau of Agricultural and Resource Economics (ABARE) and other organisations, Australia exports only around 25 per cent of its agricultural product at second-stage production, not 80 per cent, as has often been supposed. (News Weekly, May 5, 2001, and subsequent debate in the following issues.)

This false claim that Australia exports 80 per cent of its product has led to the seriously mistaken assumption that Australia’s food security wouldn’t be threatened even if the country lost half its farmers.

In turn, this has led to complacency among politicians and policy-makers about the decline of agriculture. It also led to a cascade of fatally flawed policies aimed at the export market to the serious neglect of the domestic market.

At the heart of this policy assault on agriculture is National Competition Policy. The NCP was implemented by federal and state governments and is administered by the Australian Competition and Consumer Commission (ACCC).

Its adoption saw the deregulation of 14 rural industries, based on the mistaken belief that making farmers compete more against each other would drive down costs and lead to a boom in exports, once the Word Trade Organisation negotiated free trade in world agriculture.

NCP stripped farmers of their marketing agencies in wheat, sugar and barley. The wool-marketing scheme collapsed earlier and was not replaced. NCP did away with domestic market arrangements in dairy and other industries. It opened up water markets, forcing up the price of irrigation water, particularly in droughts.

However, instead of the WTO opening up foreign markets to Australian farmers — which the Australian Farm Institute has concluded will not happen (News Weekly, September 19, 2009) — farmers who have no market power have been left exposed to the dominant market power of Australia’s two major supermarkets (see page 5 of this issue).

Today, these supermarkets are openly gouging profits from the farm sector.

Australia is on the way to becoming a net importer of food, if there is a continuation of policies preoccupied with the export market to the neglect of the domestic market.

Further, decisions about the future of Australia’s agriculture are increasingly being made in foreign boardrooms, as control of our processors and commodity-traders falls increasingly into foreign hands.

China, India and other nations are scrambling to buy farmland and downstream industries worldwide, including Australia, as part of their long-term national food security plans.

Most Australians are oblivious to the growing threat to the nation’s food security, thanks to three decades of mythology and misinformation about Australia’s agricultural markets.

So, what is to be done?

It is vital to commission Dr McGovern to undertake research that:

• exposes the dangerous misconception that it doesn’t matter if we lose half our farmers, because Australia can supposedly maintain its food security by diverting its farm exports into the domestic market;

• sets the foundations for new policies to rebuild Australian food and fibre and downstream industries; and

• informs Australians of the looming threats to the nation’s food security.

If you would like to contribute financially to this project, or know others who would like to do so, please contact Pat Byrne at our NCC national office in Melbourne:

Tel: (03) 9816 0800.
Email: <> [delete first six letters]

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