Is Agriculture Different? Part One

Is agriculture different from any other industry?  Is the production of food a more noble endeavour than any other human endeavour?

Many would answer yes to these questions – especially farmers like me – and would use these arguments to justify special assistance from Government.   It is an argument that has worked extremely well in most developed countries other than Australia and New Zealand.  The fact that agriculture is also subject to the vagaries of the weather also is used to justify special assistance. 

The chart below compares the level of support for farmers in different countries as compiled by the Organisation for Economic Cooperation and Development. 

Source:  Australian Farm Institute. 

The data will come as no shock to Australian farmers – that they receive the least support from their Government.  In other countries, they believe that farming is much more than just another business – it is a social imperative that must be supported by Government. 

Successive Australian Governments at State and Federal levels have pursued economic deregulation across entire sectors of the economy including the farm sector.  There are a number of sectors of the economy that have escaped the deregulatory push, but that is another story.

Support to Australian producers is limited to the odd drought payment and some support for research and development.  Other countries are content to go on subsidising their farm sectors through a variety of means.

Indeed it now seems that not only will Australian primary producers not receive any additional support, but they will contribute a disproportionately higher burden of taxation revenue than other sectors of the economy (in reality “negatively subsidised”).  The recent Commission of Audit for the Federal Government recommended a number of cuts to rural programs including abolishing the Rural Financial Counselling Services, halving funding to the National Landcare Program, abolishing the Farm Finance concessional loans scheme and reducing support for Research and Development Corporations. 

In addition to these measures, there has been talk of reducing the diesel fuel rebate scheme which rebates the diesel fuel excise to groups such as miners and farmers when they use diesel off-road.  This reflects the fact that producers using diesel off-road should not have to pay the excise to fund road building.  Any change to this scheme will be the “thin edge of the wedge” as any introduction to reduce the rebate will be ramped up by subsequent Governments. 

My own view is that Agriculture in Australia should not receive any special help but instead be given a “fair go” by all levels of Government, something which has not happened in recent years. The reality now for my business in Western Australia is that we pay very high shire rates for the services provided to us (virtually none) and we pay pastoral lease rents at a rate tent times that prevailing in the Northern Territory. It is possible to put in place strategies to mitigate the effects of the drought but impossible to manage unfair Government policies.