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Cattle Crisis

A Crisis talks spark a response.

Discussion in recent weeks suggests there will be an overhaul of agriculture economic policy to address the level of rural debt. I find it amazing that our political leaders always put a bright spin on agriculture, and portray all is fine on the home front, however the facts are in 2003 the agricultural debt was $31 billion and 8 years later in 2012 that debt had risen to $66 billion.

Minister Ludwig says a new national framework is to be implemented from July 1 which will help farmers proactively address risk, and prepare for the challenges associated with drought.

It is vitally important that Australian farmers are highly innovative, have low production costs and high production per hectare. In that armoury of skills, farmers need to be able to handle finance, agronomy, engineering, and be prepared for and manage drought.

These are all issues farmers can and need to deal with, however there are issues outside the farm gate and indeed Australia that have an enormous impact on the profitability of farmers and the whole rural economy.

A great example is the Japanese, who place a 38.5% tariff on Australian beef.  How we can sell beef in Japan with these tariffs leaves me a little mystified. Korea is no different, add to this the high Australian dollar and it is clear to see we have real problems competing in this country.

Minister Ludwig goes on to talk about the Gillard government being a strong supporter of our farmers and Primary Industries; I am, as many farmers are, yet to see Ministerial actions that can support the statement.

The fact is 80 farming operations worth more than $1 million across the nation are in receivership or are in financial difficulties.

Reading the productivity report, it suggests the Australian beef industry is lightly supported. The report goes on to quote what cattle producers in other countries get in the way of assistance. In the European Union, a producer will receive 77% of their gross income through farm support, Japanese farmers get 33% and the Koreans get 68%.

We need to remember our principal markets are in Japan Korea and the US and are all restricted by tariffs. Then we have to address the supermarket duopoly.

We are told the key factors to our industry are, we need to remain internationally competitive, achieve increased global access, be competitive with other meat, especially chicken and pork, address animal welfare and environmental concerns and manage climate variations and change.

I recently read where meat exporters believe they are being sacrificed for the benefit of the car industry. It appears the Japanese are playing hardball when negotiating, and are saying we must drop our 5% tariff on cars before they will talk about dropping their 38.5% tariff on beef from Australia. In fairness there are probably a number of issues however the car tariff is a large hurdle.

It should be remembered the Commonwealth government gets in excess of $1 billion a year in import tariffs on vehicles. The beef industry is not alone in feeling the effects of non-free-trade agreements, dairy, sugar, and wheat are also affected.

It appears to a lot of people, despite the minister’s positive spin on agriculture and its downstream processing, we seem to be the sacrificial calf in all this.

Perhaps the penny has dropped, or is it because of a looming election, either way the Gillard government have just announced major loans to producers in every state, with farmers able to apply for low-interest loans of up to $650,000.

To my way of thinking if we can’t address the problem where many producers can’t produce their produce for less than the cost of production then we are only deluding ourselves from the inevitable watershed. Put simply, if things don’t improve and producers are not viable, then the revolving door will continue and people will get further into debt.

What’s the answer, we need long term solutions, not short term band aid solutions, and we need a strategic approach with actions that can be implemented over time with people responsible and accountable for that implementation. It is clear the playing field is not level. How can producers compete on level terms with one hand tied behind their backs?

Beef baron Graeme Acton says it all; “there is no profitability in the industry” he is calling upon politicians to turn their attention to free trade and get the live cattle going.

What I do know is the economic reality of the beef industry is not always portrayed accurately by the positive spin of politicians and others; on top of that it will be impossible to move forward, until those who can instigate change, recognise there are problems.

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