Prologue

Why are stock dying in the north of Australia from starvation when there is plenty of stock food in the country? For the same reason, I suppose, that thousands of people all over the African continent and in refugee camps in the Middle East, especially children are dying every day from starvation and deprivation while there is no shortage of food in the world. If we are honest with ourselves, the majority of us, as we fill the larder for Christmas, just do not care. The statistics say that after we have finished our celebrations, we shall throw away half of the food we have bought.

There is a story of Bono of at a U2 charity concert, must be over ten years ago now, quietened the crowd, raised his hands above his head and clapped his hand together once. Three seconds later he did it again, and then again and again every three seconds. The, crowd, I think it was in the Albert Hall was quiet. Very gently he spoke and said, ‘Every time I clap my hands together, every three seconds, a child dies in Africa’. Someone in the audience shouted ,’Well stop f*&$#@ng  clapping then.’ The crowed booed. The money raised went to help the children in Africa yet to this day they still die of starvation.

There is nothing I can add to the disaster that is the drought in Queensland and Northern New South Wales, except to say as a nation we have always been able to find millions of dollars to help people in other countries to survive and recover from natural disasters like earthquakes  and tsunamis and as a nation we have been proud to help.

Now we have a disaster as bad or worse than any we have helped in other countries going on right now in the north of our own country and it seems we cannot come to our own aid. I ask the question why and who gives a damn about a deficit or a surplus budget when the heart of our northern agriculture is suffering unimaginable hardship? It is a situation that could  be substantially ameliorated, made unimaginably better even fixed by spending money, government money, our money.

Irrespective of one bank agreeing not to foreclose and threats being made to name and shame, and high profile media people giving their support to the beleaguered landowners, the drought remains, stock continue to die. The Intellectual property of ‘Agriculture Australia’ is substantially in the genetics of the stock we have bred over many years. That gene bank is among the best in the world, it is priceless and will take years to replace.

One of the great shames of the unnecessary ‘selling off’ of the Australian merino flock for meat, is that some of the best wool producing genetics in the world finished up as Ugg boots, sheepskin coats and on the barbecues and in the cooking pots around the world.

The task before us now is to feed the stock that remain,  we have and stop the death from starvation of Australia’s greatest asset, the gene pool of Australia’s national beef herd that has taken generations to build and which is in the process of being unnecessarily lost for all time.

During the week I had this web address sent to me.

If you haven’t seen it, do so now, before you read what follows.

It’s about the drought in Queensland and its affect on the cattle industry. I had just heard on the radio about a bloke, also I think in Queensland, who was about to feed his sheep for the one thousandth time. One thousand days of feeding sheep.

Nineteen sixty nine was the worst drought I have been in in WA. Compared to Queensland it just forgot to rain for a year. We fed grain to the young sheep  just about from break to break and after. I was in the ‘long paddock’ with about 12000 adult sheep. The ‘Long Paddock’ was really an uncleared coastal sandplain bush bock owned by the company I worked for, there were no fences, so no boundaries and hundreds of thousands of acres over which the sheep could wander.

So I spent the summer with a couple of horses, kangaroo ticks, a mob of dogs where the good ones always found the snakes, a Volkswagen buggy that VW made for a few years around 1968 that would go places in the sand where a 4 x 4 would struggle.

We lost maybe 15% of the 12,000 sheep we put out there. It was a grim year, 7 days a week and all day (most days) on horseback in the heat and the famous Geraldton wind. I was glad when it was over. I realised it was a holiday after I had watched the Aljazeera programme.

The Aljazeera programme shocked me to the core. I still find it hard to believe that while we are making millions of bales of hay over here in WA much of it for export and while millions of hectares of barley stubble isn’t baled, even wheat stubble remains untouched while grain goes onto the bins in the millions of tonnes — there are cattle dying by the thousands of starvation on the other side of the country. Station owners with their hearts breaking — unable to do anything for their stock and with tears in their eyes as they accept  charity parcels of the essentials in life for themselves of food, soap and even toothpaste.

It must raise a few questions surely about how we manage agriculture when in 1900 to1903 (from memory) Kidman lost 70,000 head of cattle in a drought. I suppose we thought it would never happen again.Yet we have not progressed. We have not drought proofed Australia when it has been and is well within our capacity to do so.

Yet we are not short of food for the starving livestock. The grain silos are full, There must be many paddocks of stubble in both WA and SA which could be baled, the government could purchase hay and straw. Western Australia has a massive hay exporting industry, who comes first? Is there no way around Australia we can find the way to turn on the irrigation water and grow the feed to make the hay to feed the stock that are dying? Drastic times require drastic measures.

Perhaps one day there will be a man or a woman or a movement, even a political party, though I doubt that one because we have a poor record there, who will have the determination to move water across this country. Perhaps one day the prosperity of the country for the majority will become more important than the power of the minority. We have become a country which is run by minorities.

If the Aljazeera programme has been broadcast in those countries to whom Australia, unilaterally, overnight, stopped exporting live sheep and cattle, they have every right to be very angry and who could blame them if they believe we are the most dishonest and self opinionated, two faced people on earth? Will they ever trust us again?

Those countries affected by Australia’s ‘colonial  haughtiness’ will remember we couldn’t wait to tell the rest of the world that Australia, this rich, prosperous, animal loving country had the strength of conviction to deny its customers the supply of hundreds of thousands of sheep and cattle based on a ‘dodgy’ video taken in a ‘back yard killing shed’ that undoubtedly showed what looked like Australian cattle being slaughtered under dreadful and inhumane conditions in Indonesia. Just so there is no misunderstanding, overnight and without consultation, the Australian Federal Minister for Agriculture, unilaterally and immediately stopped the export of hundreds of thousands of livestock — based on that video alone.

Indonesia will also remember one of the promulgators of the video was the Royal Society for the Prevention of Cruelty to Animals (RSPCA) and the other was a well funded Australian lobby group, Animals Australia. Both the RSPCA and Animals Australia were ‘so concerned’ about animal welfare in Indonesia that they colluded  with the Australian National Broadcaster the ABC, and allowed the appalling conditions of cruelty depicted on the video to continue for months until they felt the time was right to gain maximum effect, to go ‘public’, on television in Australia. When the story was broadcast it went round the world in hours and the Indonesian Government was seriously embarrassed and angry at the way Australia had depicted them to the world.

Goodness knows how many cattle suffered during the weeks while the RSPCA and Animals Australia, together with the ABC waited for the ‘right’ media moment. What persuaded the ABC to wait for weeks has never been divulged, one can only assume that notoriety, publicity and media attention were more important to them than animal welfare.

As far as I am aware neither the RSPCA nor Animals Australia have said anything about the conditions for livestock in the drought affected areas in Australia, even when they must be aware there is food available. No they have turned a blind eye and shown us their true character, which is self serving and attention seeking. Neither organisation has any concern for animal cruelty —it would seem the same applies to their vocal and at times violent supporters.

One cannot help but wonder why Al Jazeera news service, owned by the Royal Family of Qatar, made the film on the horrific drought and not the National Broadcaster of Australia ‘Our ABC’.

When we unilaterally banned all live export of animals from Australia we showed the rest of the world, maybe confirmed to a few, that we are unbelievably self opinionated. We decided that we would continue to deny  every country in the world supply of all live animals for slaughter until they met a set of animal handling and abattoir conditions designed by us. Again we behaved like colonial masters. The countries that needed the sheep and cattle had no option except comply with our demands. If they refused we wouldn’t supply.

I hope the Indonesian Minister for Agriculture now writes to the Australian Federal Minister for Agriculture with a please explain notice. I hope the Indonesian Minister asks Barnaby Joyce why one minute it is our national policy to punish our special customers and deny them cattle on the evidence of cruelty of several animals on one video on one location in Indonesia, yet the same Australian Government does nothing as thousands of cattle die  the slow unimaginable death of starvation.

This  Coalition Government when in Opposition was ferocious in its condemnation of the Labor government when it stopped the export of live cattle. They forecast it would bring ruin on many  cattle men and women, and it has. Now that Opposition is now the Government. Lacking the intestinal fortitude to change as conditions change, they have emasculated themselves to the extent they are petrified to incur an unbudgeted expence that would see feed moved  just 4500 km,(50 hours from WA) not that far if South Australia were used, to stop the starvation of thousands of cattle in drought ridden parts of the country. They are saying they are not prepared to invest in the Australian beef industry, which just a few years ago was the second or third biggest exporter of beef in the world. They are saying they are prepared to sacrifice by starvation some of the best beef genetics in the world.

The damage they will do to the beef industry of Australia is far greater than that which was done during the ban on exports.

On the film you will see a young man answer a question and I am not sure if he says the dead bull they are standing beside they paid $50000 a few years ago, or the dead bull is the progeny of that bull.

We are constantly told that in ever increasing amounts the world wants our beef. We value that future market so greatly that we are prepared to let the best genetics in the country to die of starvation when there is an alternative. Is anyone in charge in this country?

Hay_Bales_-_geograph.org.uk_-_602033CC-BY-SA-2.0, via Wikimedia Commons

What has all this got to do with farm subsidies in the EU?

Firstly what is depicted in the Aljazerra film if it happened in the EU there would be riots in the streets and people would finish up in jail.  Secondly the EU make me jealous because at least they have people like Professor Matthews, the author of the article, who is prepared to put a value on what EU farmers are really doing, growing food. We have plenty of academics and financial experts prepared to give opinions on every industry in the country, yet none who are prepared to speak about the lack of a drought strategy for agriculture.

Australia, quite demonstrably, is not prepared to do that. We have watched the demise of our processed food industry and we know the Federal Government is aware we are becoming increasingly dependent on imported food and they have shown they don’t care. That means they know the Australian industry will shrink and eventually disappear. With it the growers of the crops.

What is interesting is that Australia is increasing the amount of processed food it imports from the (subsidised) EU.

Now we have a Federal Government with a National Party Deputy Prime Minister and a National Party Minister for Agriculture, who seem quite prepared to see the heart of their State, never mind the Australian export beef industry, die of starvation, when the world wants Australian beef in ever increasing amounts. The future looks even brighter but we are letting the herd die.

At the moment it looks like the Government doesn’t know what to do with Australian agriculture both now and in the future. Perhaps they are happy with the For Sale signs that seem to be everywhere.

€FADN data highlights dependence of EU farms on subsidy payments

Can the EU justify paying € 63000 (A$93000) every year to every farmer in Luxembourg?

November 12, 2014 Written by Alan Matthews Blog posts

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Last week, the DG AGRI Farm Accountancy Data Network, FADN, made available aggregated data in its public database for the 2012 accounting year. In addition, there is now a Farm Economy Focus, or country fact sheet, based on the 2012 data for each member state which presents key FADN results in a graphical form for a general audience.

The FADN database is a key tool both for policy-makers and researchers seeking to understand the behaviour of farmers and the agricultural economy. The survey does not cover the smallest farms, but it is representative for over 4.9 million holdings across the Union. It contains a wealth of information on the economics of farm businesses, and the FADN team makes it easy to access this information through a very friendly user interface to their public database.

While the FADN tool is a terrific resource, some of the data it contains tell a less-than-encouraging story about the economic condition of EU farming. In this post, I focus on the reliance of farms in each member state on public support and subsidies.

Farmers receive public support through different types of payments. At the outset, we need to acknowledge that there can be a difference between support and subsidy. While support covers all transfers to farmers, the idea of a subsidy implies that there is a benefit to farmers.

However, in some cases, it is possible to argue that, in transferring money to farmers, the public sector is purchasing a range of services of wider value to society. Thus, there is a non-market transaction rather than a subsidy in which farmers receive payment in return for providing non-monetary benefits to the public at large. This rationale is likely to be more important in well-designed agri-environment schemes, and to be virtually absent in untargeted general direct payments.

In what follows, I use the conventional definition of subsidies in the FADN database, but let us keep this distinction in the back of our minds as we examine what the FADN data show.

Importance of different subsidy payments

The FADN data allow us to examine the importance of support payments to farmers in each member state. The table below shows both total support per farm in 2012 as well as the relative importance of rural development payments (both EU and national), other current payments (mainly direct payments but also including input subsidy payments), and investment support. There are clear differences across the member states.

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First, look at the absolute size of total payments per farm. It is no surprise to see that the largest payments per farm occur in Slovakia and the Czech Republic where large corporate farms play an important role. It is perhaps more surprising to see that each farm in Luxembourg received, on average, €63,000 in subsidies in 2012 (a relevant comparator may be neighbouring Belgium, where the figure per farm is a ‘mere’ €28,000).

The FADN payments include both EU and national payments, so it is not possible to say how much of the support to Luxembourg farmers comes from the EU budget and how much from the Luxembourg national budget (although given recent revelations about how the Luxembourg national budget seems to be financed by pocketing the proceeds of corporation taxes which should have been paid in other countries, it is probably safe to say that most of the support to Luxembourg farmers is paid for by EU taxpayers in one way or another).

The average subsidy received per farm in the EU-27 in 2012 was €11,500. Where countries receive lower payments per farm, this could be either because the total payment envelope per hectare is smaller in those countries, or because the average farm size is smaller.

Note that the three Baltic countries, which receive the lowest Pillar 1 direct payments per hectare, nonetheless all receive total payments per farm close to or above the EU average (in the case of Estonia, where the average farm payment in 2012 was €29,000, the difference is substantial; in the case of Lithuania, the average payment per farm is just below the EU-27 average at €11,100). In interpreting these figures, it is important again to remember that the very smallest farms are not included in the FADN database, so these figures refer loosely to what we can call more commercial farms.

Recalling the debate on external convergence in the recent CAP 2013 reform, these figures show how misleading it can be just to focus on one source of payments to farmers without taking into account the whole picture, as well as the importance of defining what we mean by the farm population.

There are interesting patterns when we examine the breakdown of total subsidies into the three categories. Around 4% of total subsidies are paid as investment subsidies in the EU-27. But in Luxembourg the share is as high as 23%. Why Luxembourg farmers, living in a country with a surfeit of banking capacity, should require such high levels of investment subsidy amounting on average to €14,500 each in 2012 is a mystery.

Other countries with high shares of investment subsidies in total subsidies include some but not all of the new member states, including Lithuania, Malta, Cyprus, Estonia and Slovenia. One surprise is Latvia, where farms appear to receive no investment support at all. Other countries where farms received virtually no investment subsidies include Netherlands, Greece, Romania and Sweden.

There is similar variation in the importance of rural development payments. Rural development payments include less favoured area payments, agri-environment payments and other rural development payments paid directly to farmers. Around one-sixth (17%) of all subsidy transfers are rural development payments in the EU-27, but the shares are highest in Finland (49%) and Austria (47%). Farms in three countries, including France, Greece and Denmark, receive less than 10% of their total subsidies through rural development payments.

The variation in the shares of investment subsidies and rural development payments means that there is also variation in the importance of the remaining current payments. The share is highest in Denmark (96%), followed by Greece, Romania and Spain. The countries with the lowest shares of non-RD current payments include Austria and Luxemboug (with shares of 45%) as well as Slovenia (47%) and Finland (50%).

Importance of subsidies in farm net value added

DG AGRI maintains a graph showing the relative importance of both direct payments and total subsidies in farm net value added (what it calls agricultural factor income) on its website. The graph is based on Eurostat agricultural account statistics and shows that total subsidies (which, in this context, includes just rural development and direct payments, but not investment support and some other current subsidies such as input subsidies and disaster payments) as a share of EU agricultural value added was 24% in the period 2010-2012.

The FADN figures, however, suggest that this may be an underestimate. In 2012, the average share of current subsidies (excluding investment subsidies) in farm net value added was much higher, at 38%. As in the DG AGRI graph, there is wide variation between member states, as shown in the figure below.

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In three countries, Finland, Slovakia and Slovenia, total subsidies were equal to or greater than agricultural value added. In these countries, the agricultural sector adds nothing to their GDP (except if the subsidy leads to a net transfer from the EU budget which is likely to be the case in Slovakia and Slovenia but not in Finland).

In these countries, farming is a pure consumer good financed by the taxpayer in return for, presumably, the non-economic values it provides. (In the interests of full disclosure, I should mention that I spent some days in Slovenia earlier this summer and greatly enjoyed some of its wines, sausages and cheese).

On the other hand, farms in some other EU countries were much less dependent on current subsidies. The figure for the Netherlands was 14%, and for Denmark and Italy 22%.

Importance of subsidies in farm income

As noted by DG AGRI, agricultural value added:

represents the income generated by farming which is used to remunerate (1) borrowed/rented factors of production (capital, wages and land rents), and (2) own production factors (own labour, capital and land). This concept of income is appropriate for evaluating the impact of changes in the level of public support (i.e. direct payments) on the capacity of farmers to reimburse capital, pay wages and rents as well as to reward its own production factors. This income indicator allows comparison between Member States, because the share of own and external production factors often differs significantly between Member States.

However, it is also possible to express the importance of subsidies in farm net income rather than farm net value added. The relationship between these different accounting concepts is shown in the table below. Farm net income is a better indicator of the income remaining with the farm family after paying for its external factors of production. As shown in the table, investment subsidies are added to agricultural value added to arrive at the farm net income concept. So in comparing the importance of subsidies in supporting farm family income, we must also include investment subsidies as well as current subsidies.

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The graph below shows a somewhat different, and even more worrying, picture of the dependence of EU farms on subsidies. The average dependence of farm income in the EU on subsidies is now 58%, and not 38% as in the previous calculation.

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Also, note that the Slovakian figure is hugely negative (it is truncated in the graph) as farm net income after paying external factors was negative in that year (recall that corporate farming is much more important in this country than elsewhere in the EU, and the corporate farms were, on average, loss-making in that year).

Apart from Slovakia, other countries where total subsidies were close to or greater than family farm income include Ireland (96%), Latvia (100%), Estonia (112%), Slovenia (156%), Luxemboug (169%), Czech Republic (177%), Finland (234%) and Sweden (236%).

Conclusion

As noted at the outset, support and subsidy may not be the same thing. Farmers can be paid to provide a set of non-market services, such as open landscapes, or maintaining a population in remote regions, or to protect and conserve habitats and biodiversity.

But these figures highlight, yet again, the question whether taxpayers get value for money in the way this money is spent. Can a system in which taxpayers transfer €63,000  (A$93000) each year to each farmer in Luxembourg be justified?


Photo credit: Wikipedia.

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Roger Crook

About 

Over the last fifty years or so Roger has worked in agriculture, since 1967 in Australia. From farm labourer, to station and farm manager, then progressively to a senior management position in agribusiness as the marketing and sales manager of what was at the time the biggest agricultural chemical company in Australia, ICI (Australia- Rural Division), Roger has both a practical farming and comprehensive agribusiness background.
After a brief spell as the marketing director of a big public relations company in Perth, Roger formed his own consultancy specialising in agribusiness communications and the marketing of Australian agricultural intellectual property overseas.
Roger says he will only ever be 'semi retired'. He believes Australian agriculture is at the crossroads so he has set up the 'Global Farmer' as a forum to both pose, debate and hopefully answer some of the challenges being faced by the Australian family farm and so by Australian agriculture.

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