Should the government provide more support for farmers?

There was national uproar in 2016 when dairy farmers across the country were left hundreds of thousands of dollars in debt after Australia’s biggest dairy processor, Murray Goulburn, and New Zealand giant, Fronterra, reduced milk prices in an attempt to dominate the market.

The public offered support on social media, spawning a move to boycott cheap milk deals, and the Australian government pitched in by supplying farmers with a $555 billion lifeline to assist farmers who were left out of pocket by the processors’ move.

But the price war continues today between major milk corporations and farmers. 

Meanwhile, farmers and agricultural workers of all types battle other long-term stresses, including volatile weather, heavy debt, erratic markets for their goods, long working hours, and the big costs that come from machinery breakdowns and expensive supplies.

And while a $555 billion helping hand sounds like a lot of money, Australian farmers typically receive the second-lowest subsidies of all farmers in Organisation for Economic Co-operation and Development (OECD) countries.

A 2013 OECD report compared agricultural policies of 47 countries including agricultural heavyweights such as Brazil, China, Indonesia and Russia (the 47 countries in total provide 80 per cent of the world’s agricultural produce).

According to the report, Australia has a ‘producer support estimate’ of 3 percent. A producer support estimate measures the level at which consumers and taxpayers support agricultural producers. At 3 per cent, Australia’s support level for farmers is higher only than New Zealand’s.

But should farmers receive assistance at all, given many other industries do not? Or are they more deserving than, say, car manufacturers, which were unable to remain viable even with heavy assistance?

A 2014 opinion piece published by the ABC questioned why farming was somehow seen as more noble than the many other small businesses run by families all over the country.

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“Plenty of family businesses – be they grocery stores, pharmacies, bakeries, book publishers, or restaurants – have been allowed to go to the wall with nary a blink from the government,” Paula Matthewson wrote.

“Many of those sectors are also exposed to the challenges that farmers claim make them a special case – being squeezed out by bigger entities along the supply chain, inability to achieve economies of scale, the high value of the dollar, and being undercut by dumped product. Yet when those challenges include a dry spell or drought – which, let’s face it, is hardly an uncommon occurrence in Australia – then apparently it’s time for disaster relief.”

Commenters on debating forum Debate.org had opinions on both sides of the fence..

“If you think giving money to gigantic unwieldy mega-banks is a bad idea, you have no business advocating farmer subsidies,” one user pointed out. “If a farmer develops a good method for growing a cash crop, why shouldn’t he buy out farmers who use inferior methods? Progress is somebody having a better idea. You shouldn’t try to stop progress.”

Others thought differently.

“Growing food ourselves helps the economy by providing jobs and work while keeping our funds internal instead of sending them overseas to purchase foodstuffs externally,” another user retorted. “As it stands, helping farmers through a rough patch is healthier than simply outsourcing.” 

An article by The Guardian highlighted that subsidies may lead to an overuse of fertilisers and pesticides by rewarding farmers that used them, which could harm the environment by causing oil degradation, groundwater depletion and other negative environmental impacts.

The article also claims that subsidies could distort global commodity markets and affect the global economy.

But if everyone else is doing it – China, for example, has ramped up its agricultural subsidies in recent years – will Aussie farmers lose in the global marketplace if they don’t get more help, thus costing the local economy jobs and thus money?

Is farming a special case when it comes to subsidies? Should farmers receive more financial support from our government?