A Charles Sturt University (CSU) expert in international trade has highlighted the costs and benefits of the farm finance support package announced last weekend by the Federal government.
(‘Farmers offered package to help solve debt woes’, ABC News, 27/04/13)
CSU Professor of Economics, John Hicks, believes Australian farmers are not on a ‘level playing field’ in world agricultural trade, and there is some justification for the Australian government to support struggling farmers, but at a cost to the Australian taxpayer.
“Australia is one of the world’s leading agricultural producers and agricultural output is still an important component of our international trade. Australian farmers are among the most productive and efficient in the world but are forced to compete in markets where the actions of many foreign governments put them at a disadvantage,” Professor Hicks said.
“Over many years, the Australia government has reduced the level of government protection to Australian farmers and the Australian farming sector has responded by restructuring and adopting technology and agricultural methods that have seen the productivity of the sector continue to grow.”
However, Professor Hicks believes the current high value of the Australian dollar, increased costs resulting from environmental concerns and climate change are working against some farmers.
“For some, increased productivity in the future may not be possible and in the long-term, their operations may not be viable. Various people in the industry see government support as the only way to keep some farms going,” he said.
“But providing subsidies in any form, even cheaper loans, may see many farming businesses continue to operate at a cost to society greater than the benefits generated to the society. Farm subsidies have to be paid for by other taxpayers, and they shift resources away from more valuable uses where no subsidies apply.
“They result in inefficient production, lower agricultural price and discourage the farm innovation needed to ensure that the agricultural industry remains viable well into the future.”
Professor Hicks believes those farmers whose livelihood is no longer viable, largely through no fault of their own, should move off the farm with assistance from the public purse.
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