A new cooperative role for farmers


The family farm will be superseded by agribusinesses as the basic unit of agriculture. ROGER RAVEN argues for a system of cooperatives to prevent that happening.

There is still time to save the social structure of agriculture. That being the case, we should seek alternatives, of which cooperatives seem the most promising.

Cooperatives would serve the following purposes: to provide extensive social services to their members; to use the economies of scale available from pooling their members' capital, skills and labour; to operate democratically, efficiently and in a sustainable way; and to reward their members individually according to their labour, but to share collective surpluses equally.

A number of new organisations would be required if agricultural cooperatives are to become an important part of a sustainable rural structure. Of course, such a result also needs political commitment and, in particular, money.

A "cooperatives commission" (CC) would drive and coordinate the formation of cooperatives, monitor their performance and act as a single powerful agent in issues of research, marketing and investment. It would also operate a farm labour and farm machinery pool, for hire to cooperatives as required.

Although the managers of individual cooperatives would be elected by the members, any static structure lends itself to bureaucracy and therefore excessive self-interest.

Australian managers as a group have been extensively criticised for their obsession with power and their own remuneration, laziness, indifference to risk, to new opportunities and to investment in research, development and training. An "office of management" would ensure that managers performed to a high standard by auditing both their performance and their accounts.

A 1992 NIEIR (National Institute of Economic and Industry Research) study indicated that "the existing financial structure is simply not adequate to satisfy the needs of many of Australia's most promising firms and there are compelling reasons for the establishing of a properly controlled Manufacturing Investment Bank".

As at 1992-3, Australian farmers owed $15.4 billion to banks; not surprisingly, interest charges are a typical farmer's largest single cost. Therefore, a "regional industries bank" (RIB) would take over the debt and the interest costs with the property, as well as making further loans to collectives and their members. Such a role could have been performed by the Rural and Industries Bank or Primary Industry Bank of Australia; one of the driving forces behind their flog-off is the desire of economic rationalists to prevent any such social benefit from occurring.

Obviously the RIB would influence cooperatives' strategies. The State Bank of SA was the chief creditor of the SA Berri Cooperative when it was placed in receivership in 1992. Rather than see it sold to private interests, the bank forced its merger with five other cooperatives, which was followed by rationalisation.

Marketing authorities were once able to borrow from the rural credits department of the Reserve Bank.

Broad-acre farmers are the most likely to become involved, but the concept is of just as much value to horticulturists or aquaculturists.

Once 10 or more farmers had agreed to form a cooperative, their property would be purchased by the RIB. Half the value of the property would be paid in instalments over five years; the remainder would be paid by the RIB to the CC for the establishment of vertically integrated marketing organisations, then paid to the property owners at the expiry of the sixth year. Should the sellers leave the cooperative in the meantime, the RIB would become the first mortgagee to the value of the payments made.

WA farms alone have a nominal value of $11 billion, so immediate purchase would be impossible, as well as unnecessary.

National strategies

Cooperatives would accordingly be one part of complementary state and federal rural policies to:

1. stabilise individual incomes at levels similar to those of equivalent urban workers.

2. ensure sufficient expenditure on land improvements and a reorganisation of production methods to allow the land to maintain its current average yield indefinitely.

Sustainable agriculture will require an end to land clearing and, secondly, reductions in the use of pesticides and fertilisers. It may take 30 years to restore soil organic matter content to its original levels.

Although Australian soil types are often unsuitable for organic farming, a collective approach, long-term planning and research would greatly improve current practices.

3. form vertically integrated processing and marketing organisations.

Statutory marketing authorities tend to be victims of the unrealistic expectations, short-term view, parochialism and narrow-mindedness of growers precisely because they are accountable. The grower debate about the future of the Australian Wheat Board contrasts strikingly with the silence regarding transnational grain agribusinesses.

4. provide venture capital to new but promising opportunities.

Emerging rural industries share several difficulties: very little is known about production or harvesting, markets are poorly developed, the ventures have limited infrastructure, and capital is almost unobtainable. Accordingly, the CC would strongly support cooperatives undertaking new ventures.

5. provide permanent natural disaster relief measures.

Insurance is impractical because only the most affluent farmers could afford the premium, while an enormous asset base would be required to provide what may become hundreds of millions of dollars if a drought lasts for several years. The simplest approach is for the CC or individual cooperatives to borrow from the Reserve Bank or RIB, with repayment by instalments.

6. return some of the surplus value that has been extracted from agriculture by the rest of society through productivity improvements and farm closures.

Those resources are being used to an increasing extent on wasteful and speculative ventures.

Substantial subsidies would be provided for produce sold, coupled with (tradeable) production quotas. The aim is to give farming units a better income for what they do produce without causing them to produce more.

For example, the 4 million tonnes of feed grain produced domestically would be paid for at, say, double the export price, but the CC would ensure that at least a third of the difference went towards land rehabilitation. Such a measure would initially cost up to $650 million per year, but of course it would benefit rural communities and would be a further move towards long-term sustainability.

The first reason for showing favouritism to cooperatives is that people who are willing to work together deserve support. The second is that cooperatives, like worker-owned businesses and government business enterprises, face active discrimination and ideological hostility from the private sector.

It was mainly due to the difficulty of raising capital that IAMA Pty Ltd (a joint venture company by a group of small business people to improve their market position through joint purchasing) merged with SBS Rural. It is also why Wesfarmers Coop became a public company and why Rural Traders Cooperative is to do so.

Means and ends

Obviously such an approach alters the means and ends in our society. For instance, the "means" would be democratic and administrative rather than authoritarian, since the price mechanism would be largely replaced by administrative command. Likewise, the "ends" would be political, just as they are now, but the aim would be to enrich many rather than the very few.

Equally, it would mean that the wider economy would be judged by social rather than economic standards and would rebuild the devastated manufacturing sector behind tariff barriers.

Political hopefuls who are not serious about detail are not serious about government, or influencing governmental policy. Therefore any serious left organisation has got to be supported by a group of people who know their subject.

As the left doesn't have a substantial public profile, it must rely on more traditional means of revolutionary activity, such as meetings, rallies and letters to the editors of rural papers. Obviously, when Green Left Weekly has a consistent coverage of agriculture, it will be able to pursue farmers for subscriptions.

The left — including the Greens and Democrats — is remarkably well supplied with prima donnas. Although some of those people must be aware of the advantages that a large group has over a small one, they show no desire to merge their large egos with those of others. GLW was the greatest achievement of the Australian left in the 1980s precisely because the Democratic Socialist Party was willing to be flexible in order to build alliances.

A coordinated effort by the left could persuade farmers of the merits of socialism. Many farmers back anti-social policies because they are afraid. As their impoverishment is a gradual process, we do have time to win them over if we choose to make the effort.

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