Farmers often battle the perception that their industry is highly subsidised, however the facts might shock you.
The reality is that Australia’s support for farmers is among the most meagre in the world, second only to New Zealand in the OECD.
This is an incredible fact, remembering that Australia is one of the world’s largest agricultural exporters – competing in markets where farmers receive whopping handouts.
How does Australia compare?
This year, the Organisation for Economic Co-operation and Development (OECD) released its Agricultural Monitoring and Evaluation report, assessing subsidy levels across 52 countries. This is the most in-depth research to date on the topic of farm subsidies.
The results speak for themselves. Australian farmers receive the second lowest levels of support in the developed world, second only to New Zealand.
…if you’re a farmer in the Iceland, Norway or Switzerland – more than half your farm income is delivered via government support measures!
The report found that Australia’s ‘Producer Support Estimate’ (PSE, an estimate of public money which flows to primary producers – not necessarily as cash) was one of the lowest in the OECD, with PSE constituting only 1.4% of gross farm income (read on to see what this consists of).
By contrast, if you’re a farmer in the Iceland, Norway or Switzerland – more than half your farm income is delivered via government support measures!
What subsidies do exist for Aussie farmers?
The OECD study of farm subsidies found that Australia made no payments for commodity production (which is how other OECD countries dish out their payments). Instead, the bulk (42%) is channeled into programs to help manage seasonal variability.
Given Australia’s variable climate – prone to crippling drought and flood events – the Government has established schemes whereby farmers in need can access concessional loans, to reduce the burden of interest payments in difficult times.
Rather than being a handout, this scheme is a genuine loan – and farmers are expected to pay back every penny with interest over an agreed period.
This is similar to programs available to households to switch to solar panels, or energy efficient light bulbs – just on a bigger scale!
We also have frameworks like ‘Farm Management Deposits’ which help farmers save money in good years to help them weather downturns when they come.
The bulk of the remainder of our ‘subsidies’ takes the form of environmental programs. Given farmers look after 70% of Australia’s landmass, they play an important role in making sure our natural resources are protected for all Australians.
In turn, the Government works with farmers through Landcare, the Murray Darling Basin Plan and other programs to help implement positive environmental changes. This is similar to programs available to households to switch to solar panels, or energy efficient light bulbs – just on a bigger scale!
Farmers relying on handouts is a myth! The next time you hear that being peddled, you can say that Aussie farmers are among the least subsidised on the planet. And they still manage to make a buck in a tough global marketplace, which is anything but a level playing field.