There is money to be made in farming, but not by the farmers.
The terms of trade for farmers continually declines and farmers are forced off the land. Governments and international bodies advocate further deregulation and trade liberalisation and greater use of technology. But these policies have undoubtedly failed in their stated aims of increasing food security and rural prosperity. The beneficiaries have been only agribusiness corporations.
Corporate control of agriculture has greatly increased as commodity trading, land ownership, seed and other input provision, processing and marketing has become more concentrated in fewer hands. Smallholders are thrown off the land by corporate land acquisitions, yet evidence shows that family farms are many times more productive and better cared for than large holdings.
Corporations have the ear of governments, small farmers do not; indeed, their demise is regarded as inevitable and desirable.
The official solution for farmer poverty in the 1960s was for the bottom third to drop out; small farmers have been dropping out ever since, with no end in sight. A similar process is happening around the world. The number of farms in Australia fell by 22% between 1986 and 2001, then a further 15% from 2001 to 2011.
Around the world the proportion of the food dollar going to farmers is ever decreasing, reflecting a gross transfer of income away from food producers. In Australia, the following decreases in the percentage of the retail price that farmers received occurred between 1970 and 2000: milk 55% to 22.9%, bread 14.5% to 3.5%, apples 56% to 16.6% and beef 41.6% to 20.9%.
Since 1982, farm costs in Australia have risen at three times the rate of farm prices, resulting in an average 3% decline in the terms of trade per year. Overall rural debt stood at $68 billion in 2011. Much of the leap is recent: farm debt rose from 66% of farm production in 1999 to 135% in 2009.
A major cause of loss of farm income is the increasing concentration of agribusiness corporations over all aspects of agriculture — processing, exporting, retailing and production. This has greatly weakened the ability of farmers to influence the prices they receive.
Free trade and deregulation have increased this imbalance, by reducing competition between buyers and increasing it between farmers, not just within nations but also with producers in other countries.
By 2000, the world’s top 10 agrochemical corporations had 81% of the global agrichemical market; 10 firms controlled 43% of the veterinary pharmaceutical market.
By 2015, the top 10 seed corporations had 75.3% of the market; the top ten pesticide corporations had 94.5% of the market; the top 10 veterinary medicine corporations had 81%; the top 10 fertiliser corporations 41%; the top three machinery corporations had 77% of machinery sales.
Four corporations control 90% of world traded grain: Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus. Cargill is part owner of the privatised Australian Wheat Board. All major seed companies are controlled by chemical companies — the top six pesticide corporations are also the top six seed companies.
Between 2008 and 2016 agribusinesses donated US$356 million to political campaign expenses of the two major parties in the United States, and, in 2015 alone, spent $132.6 million in lobbying politicians and bureaucrats.
Most agricultural research is funded by corporations in their own interest, and ecological solutions to problems are not included in this research. The emphasis is on biotechnology, which is profitable. Agricultural technology and biotechnology has greatly increased the extraction of profit from farmers.
Technology is said to be the key to solving the world’s hunger problem, and despite its failure to do so, it is still being touted as the answer. There are one billion hungry people, a number growing faster than population growth, yet there is plenty of food produced in the world.
Free trade agreements
The economic theory behind the structural adjustment reforms that commenced in Australia in 1983 claimed that open market competition would improve efficiency and raise farm productivity, leading to increased real farm returns.
Farm gate returns did not improve, because of the unequal power balance between input suppliers and output purchasers on the one hand, and farmers on the other. The stated reason for its failure by the proponents of deregulation is that deregulation has not gone far enough, or that the results will come in time, or that it is the farmers’ fault.
The Australia-US Free Trade Agreement was signed in 2005. In the vain hope that the US would cut its agricultural protection, Australia abolished import restrictions.
The outcome was that imports into Australia from the US grew more than exports from Australia to the US, worsening an already imbalanced trade gap that grew from $6.4 billion in 2005 to $11.6 billion in 2009, increasing every year. The overall results were negative for Australia, despite the predictions of more than $4 billion in benefits to Australia.
Free trade has decimated food processing in Australia. Companies that have closed their works down have put the blame on cheap, often dumped, imports. These include Pacific Dunlop in Cowra and Bairnsdale in 1992, Leeton in 1994, Batlow in 2002, the Heinz factory at Girgarre in 2012, the Rosella factory in Seven Hills in 2013 and the SPC Mooroopna factory in 2012. Labour must be “flexible” — that is cheaper — to be globally competitive, according to government.
The focus of the corporations and trade negotiators now is “non-tariff trade barriers”, which means regulations that protect the environment, workers, consumers and the economy. The corporations call for “harmonisation”, not to raise standards to the highest existing level, but lower them to the minimum.
Free trade agreements include Investor-State Dispute Settlement provisions, which allow companies to sue governments for enacting regulations that might affect future profits of the company.
An attempt was made by Philip Morris to sue Australia for cigarette plain packaging laws, demanding either withdrawal of the legislation or damages of US$4.2 billion. Australia won, but it cost $50 million to fight the case.
Farmers fight back
There has been a growth in rural protest movements in industrial countries this century.
Some names include Family Farm Defenders in the US, Conféderation Paysanne in France, Rural Rebels in Scotland and Farmer Power in Australia. Some are left wing, some conservative and some far right. They are a symbol of the discontent in rural areas with government agricultural policies.
There are also large scale mass organisations that act as political lobby groups against free trade and corporate concentration policies. The National Farmers Union in the US is one example, with 300,000 members. A similar organisation exists in Canada with the same name. La Vía Campesina is a network of 200 million small farmers from around the world, members of 164 local and national organisations in 73 countries.
Individual solutions for farmers include direct selling via farmers’ markets, roadside stalls or regular boxed deliveries to customers, and adoption of low input production systems (organic, agroecolological, biodynamic, etc.), which eliminate the ability of traders and input suppliers to profit from farm work.
Group solutions include cooperatives for processing, marketing, input supply and land management, Community Supported Agriculture and consumer food cooperatives. An excellent example of a functioning farmer-controlled cooperative is the Organic Dairy Farmers of Australia. The farmer members of this organisation set the price they receive.
La Via Campesina advocates for the complete dismantling of agribusiness companies; the replacement of industrial agriculture with small scale sustainable agriculture; genuine land reform; banning of all patents on plant and animal genetics; opposition to genetic manipulation; abolition of the World Trade Organisation, the World Bank and the International Monetary Fund; no free trade agreements; the right of every country to food security and food policy control; respect for nature and natural resources and protection of biodiversity; full human rights for rural people; the forbidding of speculation on agricultural and food prices; and agroecology instead of agrochemicals.
These policies come closest to delivering the changes that are needed. The constant drop in the percentage of the retail price of fresh produce going to farmers is an incontrovertible indication of increasing exploitation.
While there are ways some individual farmers can reduce their involvement with agribusiness corporations, by direct selling and agro-ecological production systems, this is mere tinkering with the problem. Only a massive reorganisation of the agricultural economy to permanently dismantle the corporations will give farmers the income and dignity they deserve.
[A longer version of this article including references can be found here.]