Support for Agriculture

The Organization for Economic Development (OECD) has been monitoring agricultural policies in its member countries for many years.  The key results of their analysis are no surprise to famers in Australia.  Direct support to Australian farmers is low to the point of being non-existent, in sharp contrast to other countries where support can amount to in excess of 50 per cent of farmer’s income (Figure 1). 

Figure 1 – Producer Support Estimates by country, 2013 (Per cent of gross farm receipts)

Source:  OECD.  European Union is the 27 member states.  



In addition to the very low level of assistance, the majority of what is classified as “support” by the OECD is not what most Australian farmers would mean by support.  

While direct support from Government to Australian farmers is undoubtedly low as shown by the OECD and other reports, the negative effect of Government policy means that support is effectively negative.  In 2011, the Federal Government stopped the live export of cattle to Indonesia – a decision which has cost the industry hundreds of millions of dollars and still has negative consequences today.  To compensate for this decision, the Federal Government offered affected producers compensation of $25,000. 

The $25,000 compensation offered as compensation needs to be viewed in the context of most producers incurring losses in the millions of dollars.  Nevertheless the OECD counted the $25,000 as support to agriculture in Australia and ignored the negative consequences. 

There are a whole myriad of policies which are negatively impact on the competitiveness of Australian farmers including: 

• ·         Increasing charges at State and Local Government services with often few services provided for the fees collected. 
• ·         Poor provision of internet services often at high cost. 
• ·         Underinvestment in key infrastructure assets by all levels of Government over a number of years. 
• ·         A forest of red-tape which affects every aspect of farm businesses. 

It is much more difficult to measure the negative affect of Government policies on a sector so don’t expect any different methodology from the OECC or anyone else in the near future.  In the meantime, farmers in Australia just have to suck it up and get on with it. 

FURTHER READING

OECD (2014), Agricultural Policy Monitoring and Evaluation 2014: OECD Countries, OECD Publishing, Paris.
DOI: http://dx.doi.org/10.1787/agr_pol-2014-en