Australia's rural crisis faded temporarily from the front pages when the Gulf War broke out. But the crisis itself did not fade. If anything, it deepened as the Australian economy slid into its worst recession since 1982-83. Bob Hawke's March 12 economic statement promised even harder times for farmers as reduced tariff protection opens the market to cheaper agricultural imports. PETER BOYLE spoke to GEOFFREY LAWRENCE, director of the Centre for Rural Social Research at Charles Sturt University, Wagga Wagga, and author of Capitalism and the Countryside: The Rural Crisis in Australia.
What are the main features of the current rural crisis?
There is no doubt that the crisis is due to anarchy in the marketplace. Australia's main political allies, the United States and Western Europe, have become its main trade enemies.
In a situation of market slump, these countries are undercutting each other with their rural exports, and as a result prices are falling. At the same time, agricultural production is rising, making prices fall further. Farm incomes in Australia for 1990-91 are expected to be the lowest since the drought of 1982-83 and 40% less than last year.
About a third of rural producers will default on their loans in 1991-92, and this is going to affect not just farmers but rural towns and national export earnings.
Both the federal government and the opposition favour so-called free market solutions to the rural crisis and the abandonment of price support systems and other cooperative forms long in place in the agricultural sector. Is this the only viable solution?
The importance of agriculture to Australia is declining. In the 1950s it contributed 25% to GDP, today it contributes 4%. It used to contribute about 90% to export income in the 1950s, today it is about 44%.
Many people used to live in rural areas, but now it is down to about 5%. So we have seen a deterioration of the political standing of the agricultural sector. Now governments see agriculture as just one more enterprise, and they are saying to farmers, "We can't afford to subsidise you. You have to get bigger or get out."
The economic rationalists in the Labor Party and in the Coalition say that the only way Australian agriculture can be made competitive is by removing subsidies for our farmers and by making the sector more streamlined and market-driven. They claim this will win back markets for Australian produce. But this ignores subsidisation abroad.
The Labor government is starting to deregulate agriculture, and the Coalition would do the same. It is not only removing the small subsidies to producers but also dismantling the statutory marketing authorities, like the Wool Board, which have given small producers some chance in an unfair market.
As they are forced down the "free enterprise" track, farmers are going to be dominated by agribusiness through contract farming, ways. To survive, farms will have to become bigger, and just like in the US, we will end up with 10% of farms producing 90% of the food and fibre.
The growing influence of transnational corporations in agriculture is altering patterns of capital accumulation on a world scale. Short-term speculative capital is coming into Australia, rather than long-term productive capital. Japan has a problem with the high value of the yen, and they want to support that by buying agricultural farmland. Agribusiness wants to vertically integrate. It wants to put more farmers under contract to supply the large international food corporations.
Agribusiness wants to link in with individual farmers who will undercut each other and provide it with cheap supplies. In the face of uncertain markets and rising costs, agribusiness is telling farmers that joining it is the only way. Agribusiness can control the markets and so forth, but it makes most of the profits too.
This might create a streamlined and technologically sophisticated agribusiness-linked agricultural sector, but it would also create serious ecological and social problems. There will be fewer farmers — 45,000 fewer in the next 12 years, it has been predicted.
Ironically, the farmers who are being forced out are those who took the advice of agribusiness economists and consultants and got into debt to expand their farms, buy more inputs and new technology. They've got caught with high interest rates. So it is some of the more technologically innovative farmers who are being forced out.
If farmers are kept on the treadmill and trying to compete with other producers by using more new equipment and technology, this will have a very destructive influence on the environment. For every tonne of wheat produced in Australia, six tonnes of topsoil is lost on average. So we can't keep this sort of production going for too much longer. We are going to have to look at alternatives.
The alternative solution is to move to more cooperative and sensitive agronomic policies, organising cooperation between producers, helping farmers to syndicate their operations (such as three or four farms sharing equipment). Governments should intervene to encourage agriculture that is ecologically sustainable.
Most sociologists, like most Marxists, have tended to look at the central contradiction between the main classes in society. But now many have become aware of a second contradiction, the ecological one. Can capitalism keep growing in a way that is environmentally sensitive? The answer is no.
If Australian agriculture follows agribusiness policy, then we are going to exacerbate the very problems that we faced in the last couple of decades. About 50% of Australia's productive farmland and about one-third of the pastoral zone are suffering from some form of degradation. Cropping land is losing between 50 and 300 tonnes of topsoil per hectare each year. It is costing about a billion dollars to repair that. Soil compaction is costing producers $2000 per hectare around Wagga Wagga. 250 million hectares of land are now so contaminated that they are of diminishing value to farmers. In the Riverina, where I live, farmers are setting up feedlots because this is what is wanted by Japanese and Korean companies to whom they look for capital. But effluent problems from large feedlots like the ones proposed for Narrendera and Hay are as bad as those created by a town like Wagga Wagga, the largest inland town in NSW.
The federal government can spend huge amounts of money to try to address these problems, but the environmental damage will continue because it is a result of the strategy it is pushing in agriculture. Ecologically sensitive agricultural policies are ruled out because they do not conform with the market-driven model.
What is your vision of an alternative, ecologically sound and economically sustainable agricultural sector?
We have to realise that, just as Australia has a degraded physical environment, it also has a degraded social environment. Just as we've got unsustainable agriculture, we've got an unsustainable rural community. If you go inland, you soon see the signs of decay. What we have to look at is sustainable rural development.
If we can develop a strategy in which agriculture is based more on local markets, we could overcome agribusiness and the need to use food preservatives so that they can lie on shelves for three years before they are eaten.
If we have people living out of the big cities (and remember it is very costly for governments to keep the cities the way they are), we can use some of the underutilised resources in country towns. This could also provide people with a richer and more democratic lifestyle.
To get an ecologically sound agriculture, you need to have an ecologically sound social structure. I think that would involve a more decentralised population that would rely more on local group systems and more on cooperation between farmers using machinery and inputs that are not environmentally damaging.
It would be a society that relied more on local and regional markets. There would still be a surplus to export and there would still be a high standard of living, and we would be eating fresh food as well.