Remco, you of course miss one vital point! If we compare farmgate
prices of the commodities produced in Australia, on a global
scale they are as efficient as anyone, moreso in many. Value
adding to those commodities is something that manufacturing
should do. That is in comparative terms, a dismal failure.

Clearly you city people are not very good at what you do!
Farmers can be as efficient as they like, if you guys let
us down, we are lost. In financial terms, the best thing
we farmers could do would be to put all our livestock
on a boat and have them processed in a more efficient place
then Australia. Right now for instance, a sheep on a live sheep
ship is worth 4 times as much to us, as one sent for slaughter
locally. Its your shackles imposed on us, that are our problem.

Steve, long story, but dryland grain production has in fact changed
dramatically. New technology means its more sustainable then ever,
fullfilling many of the needs of Dr Williams. WA leads the way
in this, but then we always do it seems :)

VK, the stuff that Coles etc import is labour intensive. In labour
terms we are not competitive, so it will be imported. Do not confuse
that with highly mechanised broadscale agriculture, or extensive
livestock production. Our problem is getting product from farms
to consumers. Thats where costs arise. Your loaf of wheat might
contain 20c worth of flour, your litre of milk is worth around 27c
at the farmgate, your kg of meat leaves the farm for 0.70c-3$.
The rest is added by city slickers.

It's a few years ago. But I am a former chief of investigations at the AWB. I noticed quite a few farmers with cereal crops beyond the black stump on land that was bever going to support such crops on any consistant basis let alone the drought.

http://www.spectre.net.au

A quick reply to the comments (I found them all valuable):

Dealing with drought really is a tricky (and political) issue. On one hand there’s the argument that farms should be treated like any other business, subject to market forces and free from government intervention. On the other, there’s the view that agriculture is our historic national backbone, and struggling farmers need help. Neither view is completely correct, and both have merit. Agriculture isn’t like other industries. Most farms are quite small, often family run. There’s a strong dependence on natural conditions and the weather (which most farms adapt to remarkably well – and it’s not their fault we’ve had an exceptionally bad run of droughts). Also, agriculture is absolutely necessary for human life. Our food must be grown somewhere, even if it is only 3% of GDP. These factors need considering.

It’s often stated that Australia is one of the world’s most efficient agricultural producers – and that’s true. But what does ‘efficient’ mean? Some production may be economically profitable over a short-period – say a decade or two – but not all farm activities are environmentally sustainable in the long run. It’s true that, on aggregate, farms get more water from the sky than from rivers, yet only the latter can we really change. ‘Externalities’ aren’t being properly priced into farm costs in Australia. We need to do this when there’s competing uses for river water to ensure ‘economically efficient’ and ‘long-run sustainability’ coincide.

However, adjustment problems are formidable. Many farmers have been on the land all their life, and aren’t able to give it up and move to other activities. Over the past half-century or so, costs have risen a lot faster than revenues, squeezing profit margins, even in good times. There are big social issues that need addressing too. Solving ‘drought’ isn’t simple, and the policy prescriptions are often contradictory. Nevertheless, the government still has a long way to go towards making agriculture more sustainable – economically, environmentally and socially.

PS, to clear up some numbers, check out the ABS report that was released today: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/4623.02000-01%20to%202003-04?OpenDocument

I have an answer to the city peoples free market ideals for agriculture.
How about we succeed from the nation, become a independent state, or at least do our books separate and that mean you will not have to” subsidise” us is the Constant theme I have heard here and elsewhere lately.

What would this mean?

• No restriction on regional Australia importing product with tariffs and other trade restrictions that cost us huge cost increases.
• Labour would be available at world market rates, not the massively subsided rates we have in Australia now.
• Agriculture income would not change, other than exchange rate changes. This is an income based on what the overseas workers producing the cheap imported products that the city people love, get payed.
• You (urban) would still be able to buy your food from the cheapest supplier. Something we farmers can’t do with our cost of doing business.
• Urban Australia would have best chance to supply urban aust with goods and services. ( but with the high price they need to charge to cover the highly regulated costs and labour market, doubt you will get much business from us)

The reason regional Australia is having problems is due to the total uneconomic secondary and tertiary sector in the urban areas. Most industries are subsidised by govt regulation of one sort or another. In fact most of the manufactured product is imported, but value added on price several times as a minimum once it reaches our shores.
Products with a retail price of less than $100, have a factory door cost of a few % 0f that. That’s single digit %.

Time for you lot to improve your productivity

One pertinent fact is lost by those that nay-say interest rate subsidies - the vast majority of those that have been severely hurt by the drought are those farmers that have sought to improve their efficency and viability by investing in new technologies and buying up unsustainable neighbours. To get bigger in this way requires borrowing of funds, and so these farmers are the hardest hit when the drought bit, with often large loans and subsequently high interest costs. Despite the large losses that they are currently generating, the vast majority of these farmers are the ones that we should be supporting through the hard times, as they are the efficient progressive farmers that the country needs. The small (you could ALMOST call hobby-) farmers are rarely in need of govt support as they tend not to take commercial risks and plod along, stripping as much out of their environment as possible, relying on the wife's income from her job to put food on the table. This is a fact often missed by city-based commentators, as they simply cant see this and dont realise the problem. The other point to address here is that the subsidies are not to offset rate rises - they cover 80% of total interest costs. The idea is to help to alleviate one of the higher costs of the business. There are also strict eligibility criteria, which results in many farmers not qualifying.

The city-slickers love to rant about the support that farmers get. I wonder what would happen if a tsunami hit the eastern coast of Australia (hopefully there would be enough warning for all the people to get out in time), destroying coastal businesses and decimating jobs. Do you think the same people would refuse government assistance to help get them through the tough times caused by a natural disaster, or would the same people that hate farmers getting help in times of extreme conditions, also be clamouring for Canberra to give them a handout?? Get real - of course they would.

cont...

I dont think anyone is in favour of govt assistance to farmers in standard dry times. It is a condition of farming in this country that weather is variable and land prices in various parts of the country reflects this variability. However, what we are faced with is not a dry spell, but a 1 in 100 year drought. It is not called exceptional circumstances relief for nothing. In this case it is no different to any other natural disaster and therefore relief should be available to those affected by it (and I include in this the rural townspeople that also cop it hard, but get little help).