Why agriculture is different

The current drought discussion in Australia is important because it highlights the fundamental lack of economic and emotional resilience in the sector that exposes it so profoundly to disruptions in production by weather and disruptions in markets.

The challenge, it would seem, is that the Australian indicators of rising farm debt, declining terms of trade and dwindling farmer numbers allude to agriculture not being a particularly viable business, particularly if it is debt funded. This begs an important question, if the Government is committed to the provision of safe affordable food for all, shouldn't it also be affordable for those who produce it?

There is a lot of discussion about improving agricultural productivity to meet the global food challenge. Australia is out of step with the rest of the world in terms of commitment to support food producers in the face of global price expectations that do not provide for farm viability. The outcome is that Australian producers have been forced to carry this financial burden. The impact of Australia's aberrant attitude to the importance of maintaining productive capacity and retaining the human capital in agriculture is now manifest, as farm businesses fail due to a lack of economic resilience in the current drought.

Australia is relatively underpopulated with a perceived abundance of natural resources including arable land and water. Our near neighbours are comparatively overpopulated with significant shortages of necessary natural resources. Our national security will increasingly depend on our reputation as a fully utilised, efficient and reliable agricultural supplier that is recognised as being too valuable to disrupt.

Current Agricultural policy and societal expectation, as reflected through Government, is out of step with the needs of today's agriculturists and increasingly out of step with the needs of those who depend on our produce.

In any business model the decision to invest must incorporate a risk reward assessment. Typically, low risk investment can be justified on relatively low returns. Conversely, higher risk ventures require higher returns to justify the same investment. Australian agriculture has gradually been wound into a high risk low reward category that belies the value of the sector to society. The market, in part through intervention by other countries, has failed to accommodate the shift in the risk profile of Australian agriculture.

It is the role of government to intervene where markets fail and the Australian Government must derisk agriculture to ensure adequate Australian investment occurs in the sector and to attract and retain the kind of entrepreneurial capacity that is essential for a sustainable future.

Agriculture is not a business like any other and the social value of the enterprise must be properly evaluated in terms of eco services, trade and geopolitical stability. Even the most rudimentary, and more essentially, honest evaluation demonstrates the value of Australian agriculture to the average taxpayer is grossly underestimated and there is a sound case for increased financial support of the sector.