Documents menu

Farewell to the family farm

By Roger Raven, Green Left News
14 September 1995

Farmers were among the prime targets of the propaganda of economic rationalism. Many were persuaded of the view that tariffs imposed onerous burdens on the agricultural sector, and that the adoption of economic rationalism (and deregulation and cost-cutting) by governments would end that unfair treatment.

However, farmers have been amongst those most severely affected by the economic rationalist agenda. The depopulation of rural regions is aggravating our already excessive urbanisation; it is in our interests to have a large and stable rural population, and to ensure that they have similar access to social services.

One convenient measure of the economic aspect of the crisis in agriculture is the portion of farm income that is consumed by costs. Thirty years ago, costs took 50-60% of gross income; they now take 80-85%.

Most Australian farms are family farms, owned and operated by husband and wife in partnership. Though this is a very stable structure, the family farmer can, in the end, rely only on his or her own resources. The rapid pace of economic change, and the benefits of economies of scale, inevitably give large corporate organisations a competitive edge, particularly in the very profitable sectors.

Corporate farms occur mainly in the meat industry. In the beef industry, most of the major feedlots in Queensland and NSW are fully or partly owned by Japanese trading companies. In the case of the poultry industry, in 1986 about 25% of the market was supplied from a few company-owned poultry farms; the balance was supplied by a thousand growers under contract to the four integrated agribusiness companies.

As the Catholic Social Justice Commission pointed out in late 1994, if nothing was done to help the rural sector, family farmers could supply only what was needed to make up any shortfall in regular suppliers' deliveries.

It was only this year that the first female farmer addressed an ABARE (Australian Bureau of Agricultural and Resource Economics) Outlook conference. Her view was that women on farms are often treated as second-class citizens - a situation worsened by their isolation and poverty, despite often having good qualifications. They were also much more concerned with social welfare issues and the long-term future of family farms than male farmers. Such issues are generally ignored by rural politicians.

A recent ABARE survey showed that the largest 33% of broad-acre farms produce some 70% of total agricultural output. Their average cash income was $77,000 in 1992-3. The remaining 67% of farms surveyed were found to be more likely to fail than to remain viable.

An average farm has to have a cash income of $40-80,000 a year to remain viable. The average broad-acre (grain/sheep/cattle) farm income over the past five years would be well below the lower end of that range. Only 2% of farmers are reported to consider themselves to be highly profitable.

Up to 70% of the annual increase in gross national product arises from environmental degradation. Due to Australia's infertile soils and erratic climatic patterns, agriculture has been the main cause of the degeneration of our soil and aquasphere ecosystems. However, although the pastoral industry is causing severe degradation, temperate agriculture is not far from sustainability.

The 1991 Farmfacts Asset Survey indicated that most farm equipment is obsolete; 40% of the tractors, 50% of the harvesters and 95% of the trucks owned by the farmers surveyed were more than 10 years old. Farm production is therefore being sustained by debt, land degradation and depreciation.

Politicians and economic rationalists have forced state and federal agriculture departments and the CSIRO to be uncritical, narrow and commercial. Consequently, there is no unbiased examination from the public interest or farmers' point of view of the benefits of available technologies.

Profit-making organisations will almost always seek to pay the minimum possible for farm produce. Competition likewise forces them to work to the lowest common denominator.

There is not yet a recognition that prices and money values are nearly as inadequate an indicator of economic ``efficiency'' as they are of social values.

In practice, the necessary conditions for truly competitive markets are never achieved. Consequently, the prices we, in the real world, work with are almost never either ``true'' or ``fair''.

Post-Soviet experience shows that administrative command is far superior to the price mechanism as a means of allocating resources. In the case of Yeltsin's Russia, the number of private farms peaked in late 1994 (at less than half the expected number) and is now declining. Only 3000 of the 112,000 private farms created during 1993 actually produced a marketable surplus. Throughout the formerly state socialist countries, collective farmers are fighting the efforts of the new ruling classes to destroy collective farm structures.

Any effective rural policy must address: 1. rural credit (cost and availability); 2. research and technology; 3. advisory services and training; 4. natural disaster relief; 5. income support; 6. obsolescence of equipment; 7. marketing; 8. land use conflicts; 9. environmental degradation; 10. rural social services; and 11. easing the pain of rural adjustment.

Some reasons for supporting agricultural industry are: to maintain a core of skills, necessary for a diversified economy, for an informed understanding of overseas trends and to allow the sector to be expanded as opportunities arise; to replace imports and earn export income, should the cost of imports become an excessive burden, or international crises cause our isolation; to support a large and socially stable rural population; to support environmental sustainability and industrial diversification in both urban and rural regions; and because family farms are a social as well as an economic unit.

Without extensive administrative measures, the family farm will be eradicated as the basic unit of agriculture by agribusinesses. Such a result will have big social costs.