Continued
Regardless of the findings of the ACCC that the Coles $1 milk was having no affect on dairy farmers it has had and it has had a deleterious effect on the milk processors as well. The ACCC attitude was that consumers benefited. Surely if consumers are to benefit it should be as a result of genuine increases in productivity so that the price paid at least covers the cost of production, processing and distribution, not as a result of a subsidy by a duopoly.
Lastly, do you think it appropriate that a processor of primary product conspire with outsiders, an environmental group for example, to cause a glut in the product they acquire?
The point is that prices for our agricultural production are highly manipulable and any large player can send any industry into decline at any time for any buyer to acquire at fire sale prices. Is this acceptable? Is this what you expect from the free market? Is it in the interest of society as a whole or the national interest?
You can argue the point about economic theory all you like but this is the reality

I think it comes down to which is more believable, Say's law with the supposed "supply creates demand" and the assumption at prices that pay the costs of production, or Engle's law with ever decreasing real prices, I know which one feels like the farmers real world .

Ben Rees has nailed it and its time the old guard took their leave and allowed a new crop to answer the policy problem with full knowledge of the way it is based on empirical information rather than some unrealistic theory which does not apply...

Nev
Empirical data don’t interpret themselves. That requires theory. And if the theory contains logical flaws, the conclusions will be logically invalid = irrational.

It is logically invalid to blame free markets for farms being unprofitable unless:
1. you have eliminated the possibility that the problem is being caused by any of the thousands of government interferences in farm markets. We are at the stage where the government claims effective ownership of the soil, the vegetation, the water, the air, the fauna, the labour, the conditions of raising, selling and transporting stock, the chemicals, the supply of money and credit, and has taxes on every input. What account have you taken of that fact in blaming free markets?
2. The allegation that the free market results in “distortions” to the market reminds me of that joke: one economist meets another and says “How’s your wife?”. The other replies “Compared to what?”
Unless you’re going to define and justify the ideal state you’re comparing to, the argument is vacuous nonsense.
3. The purpose of the existence of “the market” – all the seven billion people in the world their actions in buying and selling – is not necessarily to “deliver profits” to Australian farmers.

Therefore your criticisms of free markets are unfounded.

Campaigner
I am on the land myself, and at the pointy end. But it should be obvious to you that “environmental regulation”, and governments stealing billions of dollars worth of the property rights of farmers, a la the native vegetation laws, is not caused by “free markets” it’s caused by the opposite – government regulation. It’s caused by socialism.

“Is this all acceptable to you? Should farmers have to foot the bill for community environmental expectations?”
Not at all. At the very least farmers should be compensated for acquisition of property rights on just terms as required by the Constitution.

But the free market solution is even more just - those who want to restrict farmers’ property rights for political reasons must pay for the costs voluntarily, not use the political process to simply steal property rights of farmers.

The Labor party’s destruction of the industry of live cattle exports, and with it much of the economy of the northern third of Australia, together with the killing by starvation of thousands of head of stock, and depriving our third world neighbours of food – all to crawl up the arse of the ABC – is caused by government, not “free markets”.

“Can you please explain why you think farmers going broke can be a benefit to society?

Yes. Human society doesn’t stop at the borders. The State does, but society is not the State, the State is not society, and politicians do not represent you better than you represent yourself.

You could only logically blame “the market” if the purpose of the world's population were to deliver profits to Australian farms above all the other values and wants that all humans are trying to satisfy by buying and selling. But the purpose of the world’s existence is not necessarily to “deliver profits” to Australian farmers.

Think of it this way. If the profits delivered to farmers were solely a result of government policy, then that’s just straight socialism – redistribution of wealth forcibly taken from others. It’s exactly the injustice we’re complaining against in the native vegetation laws, and live cattle export ban.

However if the result of the free market were that Australian farmers make a loss, that’s the same thing as saying that the world’s food consumers can get the same satisfaction of their wants from someone else who can serve them more cheaply. In that case, that would be a benefit to human society. Handouts to farmers would be no more justified than to wagon-wheel makers.

The common farmers’ lament that they are “price takers” presupposes a false theory of price formation. If I offer them one cent for their year’s produce, they don’t take that, do they? Graziers don’t face a monopsony. And the grain-growers monopsony is caused by government, not free markets.

By far the single biggest factor preventing Australian farms from being profitable is the countless parasitic government interferences in virtually everything.

CouldI as a non economist, just a pragmatic fruit grower be permitted some comments. My arguement is not on economic theory but on what is currently happening in the real world. The free marketeers may be right - if we had, or can ever have a free market, that would be fine. I say we have never had such a thing and it is impossible given the stuctures we have.

The 'free market'(NOT) is full of distortions both corporate (monopoly, oligopoly, abuse of market power etc), government (production/export subsidies, tarriffs, insurance subsidies, subsidies cloaked in environmental guises, (see WTO rules, EU CAP policies etc etc). The world IS NOT the same all over and there are distortions everywhere.

The other major factor in NEVER being able to have a "level playing field" is simple, to my mind, the world will never pay the same wage rate, so there can NEVER be a level playing field - unless it is artificially levelled. This is why the developed economies should, and do impose tarrifs and pay subsidies (and then try to hide them as in the US subsidised insurance and the EU's environmental subsidies).

This is not socialism, it is pure pragmatism.

Australia, is duped into obeying rules that are not obeyed by the ones that made them. We pay the highest cost for labour in the world. USA on the other hand, pays a quarter of what we pay for labour but provides a tarriff barrier for some industries and subsidised crop insurance - instead of direct production subsidies. I could go on for ever....

We need to overhaul our system and convince government to think for itself and what is good for Australian farmers and people. If we could have a true free market and a level playing field then I would support that. But, we can't so we need to level the playing field using all the measures available to us so that we can give a 'fair go' to our farmers and our people. Stop the ideology, look at the real world and then counter all the distortions.

The economics of what we are discussing couldn’t be explained clearer or briefer than in these two short funny articles by Bastiat which are as true today as when they were written in 19th century France:

“Must Free Trade Be Reciprocal?
http://mises.org/daily/6193/Must-Free-Trade-Be-Reciprocal

“A Negative Railway”
http://mises.org/daily/5201/

Your critique appreciated.

What you are all saying, is like saying, to be “pragmatic” why don’t we dig holes in the roads where foreign goods are received into Australia?

It doesn’t make sense. It should be obvious that this will make the Australian consumers, and foreign producers and consumers worse off. It would “deliver profit” to Australian farmers at everyone else’s expense, by a straight wealth redistribution.

But if that is the aim, to be more "pragmatic" why not just take the money directly out of the bank accounts of everyone else – old age pensioners, and kids working at McDonalds, and bus drivers, and shop assistants – and directly deposit it into the bank accounts of farmers? Because that’s what you’re suggesting after we strip away all the jargon about “distortions” and “Engel’s law”. Everyone would immediately recognise and reject it as corrupt snouts in the trough, which is all it is.

Certainly there is not and never can be any such thing as a “level playing field”. But the argument that “This is why” western states impose tariff barriers doesn’t logically follow. They impose trade restrictions to create a level playing field? Are you kidding? Meaning what? Please define it and we will immediately see how any policy advocated on that basis is self-contradictory, and makes society poorer.

And what is the perfect or ideal state which market distortions are allegedly a deviation *away from*? A level playing field again? But we are already agreed that it doesn’t and can’t exist: it’s a nonsense reason. “Equilibrium”? Another abstraction of perfection.

According to all you guys’ theories, while ever imperfection exists in this world, governments should have an open-ended to arbitrarily loot productive person A and give to pet political favourite B.

It’s socialism alright, and the exact opposite of pragmatic.