Friday, October 9, 2015

Growing contradictions: Conflicting policies in agricultural Australia


According to the Australian government, the Australian economy was "built on the sheep's back" and agriculture remains one of the pillars central to Australia's successful growth and development.   Despite this centrality, farmers often conflict with mining and environmental interests, in addition to facing traditional issues of regulation, drought, and volatile commodity prices.  This conflict has recently evolved into something akin to lawfare, before the government backtracked.  Lawfare can vary dramatically in its definition, but in this context, means the use of a legal system to subordinate a less powerful group--in this case, farmers and environmentalists. This definition is lawfare in the broadest sense, and amounts to coercion of marginalized groups through a domestic legal system.

Before I dig into the meat of the Australian rural, agricultural experience, let me provide a few numbers (linked in the heading below).  Furthermore, if you would like to compare the Australian experience with the American agricultural-mining intersection, read this.

Facts & Figures

All dollars are Australian in the following paragraph.

In 2013-14, farm production was valued at $51 billion, accounted for 2% of Australia's GDP, and 15% of merchandise exports.  In addition, farm production contributes significantly to the food, beverage, and tobacco processing facility (which accounts for another $25 billion).  More interesting is the sheer amount of land dedicated to agriculture: 53% of Australia's  land mass (406 million hectares) is devoted to some form of farming.  Agriculture engages 115,000 businesses as primary participants and engages 13,900 businesses  in a secondary fashion.  Nearly all of the agriculture businesses are 99% Australian owned, and 97% of farms are small businesses (defined as an annual turnover of less than $2 million per farm).

The government acknowledges that agriculture is significantly important in regional areas.  About 270,000 Australians are employed in the primary agriculture sector, and an additional 223,000 in agricultural manufacturing and processing (Australia's population is nearly 24 million).  However, over the past 50 years, agriculture's percent of employment has dropped significantly, from 8% in 1966-67 to 2% in 2013-14.

So what do these numbers suggest?  Agriculture seems to be a bit player in most people's lives, but a significant contributor to the overall economy.  It takes up vast swathes of the empty interior, away from urban centers, and employs a significant portion of the rural population.  That population has the same worries that all farmers have: drought, commodity prices, and regulation.

An aborted attempt at lawfare.

Mining, as discussed last week, is also big business in rural Australia.  And after several significant setbacks (the Carmichael coal mine), the (now defunct) Abbott government confirmed its intention to repeal section 487 of the Environmental Protection & Biodiversity Conservation Act.  This move is significantly controversial for two reasons: it was contrary to what Attorney General George Brandis had assured the public earlier and  to what MPs had been told; second, it excludes most farm organizations from mounting challenges to federal environmental approvals.

The changes require that anyone who wants to mount a legal challenge to a governmental environmental approval must be "directly and adversely affected" by the project.  The decision to repeal s. 487 stemmed from the denial of federal approval for the Carmichael coal mine, championed in court by urban environmental groups (labelled as environmental "vigilantists" and "vandals" by Attorney General Brandis).  Some groups have termed the decision to repeal s. 487 as "lawfare," because it advances the interests of industrial actors over those of smaller, less powerful environmental groups and farmers.

The changes to the law would require legal proceedings (and all of the time and money those proceedings entail) to determine if a group has standing, and at the end of the litigation, most of the groups would lack standing.  This is especially problematic, along with the timing of the attempts to repeal s. 487, given the pending approval another massive mine on the fertile Liverpool plains of New South Wales.  Unlike the urban environmental groups that challenged the Carmichael mine, farm groups were readying a challenge to the Liverpool mine to prevent the loss of prime agricultural lands. Is the Liberal Party trying to steamroll all environmental opposition, including another major rural industry, in favor of the massive export mining industry? Will  the environmentalists and farmers get together in Australia like they did over Keystone XL?

It remains to be seen if the changes will pass, but for the moment, it appears the effort has stalled.  Farm groups, including the National Farmers' Federation, voiced vigorous  opposition to the bill.  And as of late September, it seems to have disappeared from Senate consideration, though the attorney general has not ruled out a high-level review of the changes in the future. the Senate is due to issue its report on October 12.  As of September 27, it has received 135 submissions, almost overwhelmingly opposing the changes.

Drought: what nature taketh away, the government giveth. 

Water management and drought conditions are of serious concern to Australian agriculture.  Currently, nearly 70% of Queensland and parts of northern New South Wales are experiencing severe drought conditions.  To help alleviate the drought, the federal government promised a massive aid package to rural communities, including $250 million in concessional loans for water storage, infrastructure improvements, and similar projects.  This emergency measure was only a small part of $3 billion invested in drought and risk management for rural agricultural communities that includes:

  • Increasing crop insurance
  • Accelerated depreciation incentives for building fodder storage assets & water facilities
  • Making Farm Management Deposits more beneficial & attractive
  • Enhancing the Farm Household Alliance
  • Increasing access to rural financial counselors
  • Increasing community and mental health support
  • $250 million per year over 11 years for tax assistance 
  • $35 million to fund shovel ready jobs in drought affected communities.
It seems contradictory that the federal government would attempt to limit the ability of farmers to protect their interests in arable land by repealing s. 487, while simultaneously providing significant assistance to stabilized drought-affected agricultural communities. The government's seemingly contradictory actions are exacerbated the the assertion that agriculture is central to Australia's continued prosperity. And, on the other side of the debate, it is intriguing that the rural economy readily accepts government subsidies and loans despite being proudly self-sufficient.  Though, perhaps, the acceptance of government help is a damning indicator of the poor health of agriculture as a sustainable economic engine.  

Confusing policy and contradictory rhetoric

Australia has the same conflicting agricultural polices as other countries.  The federal government's emphasis on mining, and the aborted attempt to limit standing, demonstrate that the federal government looks at rural agriculture in a marginal way, at least compared to the mining behemoth.  This attitude is disturbing.  Mining companies in Australia are more likely to be towards the international conglomerates, especially compared to the  homegrown, small-business agriculture economy.

These contradictions are inherent throughout the rural experience, but nowhere does the rhetoric that agriculture is central to Australia's prosperity ring hollow than an incident in the state of Western Australia.  There, a potato farm is facing court and jail time for growing too many potatoes.  Western Australia  is the last remaining Australian state with a regulated potato market. The Potato Marketing Corporation of Western Australia therefore sets quotas to ensure stable commodity prices and aa healthy supply of potatoes.  However, Western Australia is home to a rebel grower Tony Galati, who ignored the quotas imposed by the PMC, gave away free potatoes, and opened his own chain of supermarkets called Spudshed.  Of course, the PMC could not stand such independent and disruptive thinking, so it sued Mr. Galati.  This, despite the healthy outlook for potatoes in Western Australia between potato chip manufacturers, a slightly larger-than-average state market (50% compared to the national 49% of households that purchase potatoes), and a projected 3% increase in potato purchases by poor, 18-24 year old students (no, I did not make that up, the PMC did research).

The point of this example is to say that farm policy, on both the federal and state levels, seems ridiculously conflicted.  On one hand, farmers are challenged with drought and given government assistance.  On the other, state governments punish agricultural innovation, and the federal government seeks to severely limit agricultural access to legal remedies in favor of the mining behemoth.  This conflict seems especially problematic in regions singularly dependent on a massive industry, agriculture (at least in the Australian context, with less massive agribusiness than the United States), seems to be more benign than mining.  And agriculture seems to promote the rural ideal of self-sufficiency, and can do so for the entirety of Australia.  Whereas mining interests are almost solely export focused.  If Australia really was built "on the sheep's back" and agriculture is still central to sustainable economic growth, I would think state and federal policies that encourage responsible agriculture over mining would be the norm.  But this is not presently the case.

Will the Turnbull government continue pursuing the lawfare tack taken by the Abbott government, and prop up the Australian agriculture sector with massive government aid? Or will there be a realignment around a circular, self-sufficient economy that celebrate rural values rather than exploitation?  We can hope that Australia will make the right choice: promote environmental ethics, rural cohesion, while deny industrial interests the opportunity for rural exploitation.  But, that possibility seems remote given the thrall that mining holds for the Australian economy.

1 comment:

Dakota Sinclair said...

It seems perverse that regions are held together with government subsidies. In the U.S. many of the large farms, if not all of them, rely on federal grants and subsidies. This has allowed them to expand and wipe out the small town farmer, self-sufficient and reliant. However, many farms, with the exception of California, are not in drought laden areas of the country and don't necessarily need government subsidies.

The notion of lawfare seems to be a natural evolution. For the longest time there has been that unspoken understanding that a neighbor or coworker, the business owner, anyone with money, could bury the "little guy" in an army of lawyers. Sure, you'd be in the right but can you afford the legal counsel? What Australia appears to be doing is taking the game up a notch. Give the wealthy bullies the legal tools to reduce their attorney costs while crushing rural areas.

On a note related to the potato farmer. The U.S. allows lawsuits against farmers who inadvertently "violate" copyrighted Monsanto seeds, even if the seeds blow into a farmer's field and proceed to grow naturally. As a nation the country was not built on a sheep's back, but was envisioned as a nation of farmers by Thomas Jefferson, and the stereotypical farmer has represented American self-sufficiency and hardiness. Yet the country has allowed itself to fall into exploitation. As you noted, it's hard to see the Turnbull government taking a different route when the landed interests already have a toe in the door and can see how well things worked out (financially) elsewhere.