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Issue #1617      November 6, 2013

Editorial

Agri-businesses taking over the farm

There are strong divisions within Coalition ranks over the question of foreign investments, price regulation, privatisation and free trade in relation to agricultural products. The Coalition is divided over whether to give Chinese companies the same investment rights afforded to US and other foreign corporations.

Some National Party members of government are strongly opposed to lifting import restrictions on farm products. There are strong concerns over the deregulation of milk prices. There is growing opposition to the sale of rural land to foreign entities. “Free trade” and deregulation of foreign investment are being questioned by Nationals and the farmers some of them represent.

Dairy farmers are one group up in arms. The Guardian warned in 2000 that if state pricing controls on drinking milk were removed, that “dairy farmers faced extinction”. (“Consumers, farmers milked”, Guardian, 05-07-2000)

At that time dairy farmers in NSW were guaranteed a “farm gate price” of 54 cents a litre for their milk. Since deregulation, the two major supermarket chains have exercised their monopoly powers to cut the price.

Prices not only plummeted and wildly fluctuated, dairy farmers were left with no certainty for the years to come. By 2006-07, typical farm-gate prices in NSW were 35.7 cents per litre – two thirds of their 2000 price, and closer to half in real terms when rising costs are taken into account. In 2011-12, NSW farmers received around 47.4 cents per litre. To have just kept pace with the CPI, they should have been paid more than 77 cents.

Since deregulation in 2000, the number of dairy farmers has been halved from 12,500 to close to 6,000 and there are many more on the brink, being driven out by monopoly pricing mechanisms that see them paid less than the cost of production and transportation.

Co-operatives have been corporatised (eg Bega Cheese) and then sold. At the same time the major supermarkets have increased their market domination, monopolising over 50 percent of the fresh milk market, compared with 25 percent prior to deregulation.

Deregulation has facilitated the demise of family farms. Herd sizes are becoming far larger as farming and processing (cheese and other products) are being taken over by larger industrial outfits, moving towards monopoly production. As families are driven off the land, the agro-industrial complexes have taken over. For example, Warrnambool Cheese & Butter (WCB), the oldest dairy processor in Australia, is listed on the ASX. Three dairy processors – Bega Cheese, Murray Goulburn and Lion – own around 45 percent of its shares.

Now there is a battle over control of WCB with some of the biggest foreign global players competing for what they see as a lucrative gateway into Asian markets.

This process of monopolisation of dairy farming, processing and marketing has accelerated in recent years. A hand full of exporters will soon be dictating milk and milk product prices for exports. Small family farmers will be further squeezed and at some point supermarket prices will rise as retail monopolies exercise their pricing powers.

The long-term sustainability and viability of agricultural production in Australia can only be assured by government planning and regulation, by support for the rights of small farmers and public ownership of the large agro-industrial set-ups. Planning and regulation include pricing, determining which crops are grown, environmental measures, water usage, promotion of co-operatives, and single marketing desks.

One thing can be certain, the so-called “free trade” (read monopoly controlled trade) being so strongly promoted by neo-liberals such as Treasurer Joe Hockey, is neither free nor in the interests of Australia’s farmers or the people of Australia. Nor do deregulation and competition policy result in more competition. They are a recipe for privatisation and monopoly domination.

Next article – Plan to aid dugongs and turtles

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