Monday, 15 December 2014

Where's the transition industry policy for agriculture in Australia?

It's a sign of the times when newspaper headlines refer to something that went viral on social media. I think back to my journalism studies and it was never envisaged within the definition of news. We were still dealing with the dog bites man/man bites dog paradigm.

Because of personal circumstances, I've been taking a particular interest in the commercial realities and challenges of agriculture in Australia and I came across this article in the Toowoomba Chronicle: Darling Downs Vet's "corporate terrorism" blast goes viral.

It's well written, coherently argued and raises some striking points.

There's also last week's announcement from one of the big four banks of a 12 month moratorium on penalty interest and foreclosure action against drought affected farmers. None of the others have followed.

This prompted me to think about these problems from a public policy point of view.

Living in Melbourne (or any city) it's easy to forget about what it's like to be on a farm during drought. It's one of the most depressing and soul destroying things you can experience. The endless blue skies, unblemished by clouds, become oppressive, rather than welcome. A few years ago when Melbourne was in drought, people complained about water restrictions that meant they couldn't water their gardens every day. On a farm, vegetation disappears and the ground is just bare dirt. Animals are skin and bone. Everything is covered in dust. Hope is burned away under the relentless sun.

Not only is there no water or vegetation, there's no money. Income dries up too. We might feel the impact with an increase in food prices, but they'll creep up without being noticeable.

This image is from the Bureau of Meteorology and shows areas that have had below average rainfall in the last two years. Those red areas are Australia's prime farming areas. From their website:

As I've watched my family's (mis)fortune on the land, I've come to the conclusion that farming, grazing, and any agricultural business is a mug's game. The investment required is enormous and the conditions required for a return - even to break even - are completely uncontrollable. The weather is central, yet is so uncertain. What other business has this challenge as central to its standard operating procedure? Add to this the impact of climate change and "free market" agreements which make market conditions even more difficult the need to borrow money is the only thing that's certain. Banks will lend it too, but have no tolerance for the natural vagaries of the industry. Call it corporate terrorism or at the very least, it's the modern equivalent of the unctuous snake oil salesman or travelling tent evangelist. The hands go out to take the money, but there's no one there when you need help.

One of the things we take for granted in the city is the ability to go to the supermarket and buy whatever food we want. Some of us are conscious about origin and try to buy local, but anyone who has ever tried to buy Australian garlic will know how hard this can be. We have a secure food supply. I don't think its continuity is assured. As more farmers are forced off the land and fewer people take it up, the real question is "who will grow our food"?

My Dad talked to me the other day about how his father was able to raise a family of four on a reasonably small farm. That's not possible anymore. What surprises me is that this is an industry going through the kind of transition that the automotive manufacturing went through in Australia, yet the support for the people who have no choice but to leave is just not there.

One bank promising not to foreclose on drought affected farmers for 12 months is not going to cut it. Where's the comprehensive public policy response? There isn't one. Farmers aren't sexy in the way cars are. They're also not concentrated in particular towns. Most regional towns and villages in Australia feel the flow on effects when the farms surrounding have no money to spend. While 12 months might bring welcome relief for farming families who are affected, it does nothing to solve the problem. What happens at the end of the 12 months? Farm debt will have grown even more and the capacity to pay still won't be there. Perhaps the banks hope that the issue will have faded from public view and they can quietly go about the business of evicting families.

The other aspect is the actions of the supermarket duopoly which distorts the market and puts further pressure on farmers.

Food is pretty important. A safe and reliable food supply is critical. It might be hard to imagine these are under threat, but without a comprehensive public policy response, we're in trouble. Some may argue that the market is operating as it should and weeding out inefficient businesses. That's probably true, but there are plenty of examples where a pure market response has been abandoned and the government has intervened.  Surely feeding the nation in a secure, sustainable way is a priority.

ETA: Today's Daily Telegraph newspaper has a comprehensive story and photographs about the situation in Walgett in NSW's west.

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