Green shackles could bury farming's future

The markets opened up by our free trade agreements will simply go to rivals if we allow land clearing and water use rules to kill productivity growth on our farms, says ALAN OXLEY.

The government's new free trade agreements (FTAs), especially that with China, have underlined the huge market for food growing in Asia. However, if Australia's farmers think that bounty will just drop into their laps, they are wrong.

There are two problems. One is an ominous decline in the capacity of Australia's farm estate, once of the world's most productive, to supply. The other is the "farmgate" mentality in the farming community - what's beyond it is someone else's problem.

The Asian FTAs include valuable commitments to open markets for Australian agriculture. But the timetables are long term. The rapidly expanding middle class in Asia, particularly China, is creating new, huge demand now. Is Australian farming positioned to supply this rapidly expanding market?

An overview of the performance of our agricultural industries in the last decade is sobering. Productivity over the last decade has averaged 1.3 per cent. This is below the global average, certainly lower than in the US and New Zealand where productivity has been above 3 per cent. Another ominous statistic is that the volume of production was static between 2001 and 2011. What is the cause? There will be several factors but one stands out. Land available for farming shrank by 15 per cent.

Some might say the record drought in the 'noughties' brought all these indicators down. It did not strike the entire continent. Productivity was twice as high in the west and north as the rest of the country.

We do know for a fact that during that decade state governments imposed significant restrictions on clearing of native vegetation and reduced the flexibility by farmers in the use of their own land. In 2004, the Productivity Commission found this devalued property rights and reduced the capacity farmers to expand production.

Water entitlements for farmers from the Murray-Darling system were also reduced by a third, ostensibly to save the environment from what was envisaged as continuing drought. As predicted, the water flows returned; but farmers have not been invited to buy back the water rights. Limits on conversion of forest land (outside conservation areas) to other purposes, such as farming, were also extended.

It has not been a declared policy of any Australian government to reduce the farm estate. This has been the incidental impact of creeping environment policy. Unless there are changes, this process will continue. The Nature Conservancy, the world's biggest conservation organisation, has plans to limit land for cattle grazing in the North. WWF also supports this. Its core policy is to reduce the farm estate world wide - because we eat too much and there is too much farming. Both also plan to turn a huge area in south-western Australia into a nature reserve.

Read more here:
Green shackles could bury farming's future