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Nov 1, 2010

Count Carl Gustav Wachmeister wants to cut your lunch

Australia faces a growing "food security" problem, we're told by politicians and industry. Except, we're not - it's just old-fashioned protectionism on the march.

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If Labor ever wants to get a clue about how to sell its policies, it could do much worse than examine how rent seekers and vested interests go about it.

The basic process of creating an effective narrative isn’t that complex: you establish there’s a significant problem, then you provide a solution, explain the solution and how you’re going to implement it and who will benefit.

Let’s take food as an example.

Food security is quite the fashion these days. The Nationals, and particularly Barnaby Joyce, have been running a nice xenophobic line on it, particularly about Chinese acquisition of farming land and Chinese food imports. The Greens have used it to enhance their appeal in regional communities, by targeting the specific but separate issue of mining in agricultural areas (the Chinese figure in that as well). Labor promised a National Food Plan during the election.

It’s easy to run a xenophobic line on food security by talking about how we’re selling out food resources to foreigners, both by importing more food and allowing foreign investment in agriculture. Exhibit A: a rant by former Land editor Paul Myers a fortnight ago for the Fairfax press about how “large segments of food processing and marketing have been sold offshore”. Myers talked of the threat posed by, variously, China,”the Sultan of Brunei, the Swire family of England… and Count Carl Gustav Wachmeister of Sweden” to our food security.

In this febrile atmosphere of sinister Swedish counts, the food production industry’s peak representative body, the Australian Food and Grocery Council last week launched its second annual State of the Industry report, ably assisted by Industry — or “Innovation” as it’s known in modern parlance — Minister Kim Carr. Hopefully Carr picked up some tips on how to manufacture a narrative, given he was happily doing just that.

The main take-out from the report was the “alarming” news that Australian had been a net importer of food in 2009-10. That’s the problem established. Then came the solution.

In the ensuing media coverage, there were plenty of calls from the food industry for the Government to do something — a 30-50 year plan, the head of Goodman Fielder demanded (none of your rubbish 5-year plans). The development of business conditions that (in the words of an AFR journalist) “enhanced rather than inhibited the competitiveness” of the food industry, according to the Council chairman and head of George Weston.

The National Irrigators’ Council, along with the Grocery Council, warned of the threat posed by the reduction in water allocations in the MDB. Above all, “we’re not asking for a government handout,” said Grocery Council head Kate Carnell, “but we are after a regulatory environment [that’s supportive].”

But let’s go back a step. What’s so alarming about Australian being a net food importer? And a net importer for reasons the Council’s own report readily identifies — drought and a high currency? What’s the problem with food imports compared to other types of imports? The subtle suggestion of the emphasis placed on our “net importer” status is that Australia isn’t able to feed itself. Otherwise, what’s there to be concerned about in importing food, unless you’re simply a protectionist?

Australia of course can feed itself comfortably. As the Productivity Commission explained in its demolition of the “food security” myth when discussing the MDB, Australia in recent years exported about 60% of its agricultural produce, even in the middle of a drought. The Department of Agriculture Fisheries and Forestry gives more detail in its annual Foodstats series: we export more than half our wheat, more than half our barley, more than half our cheese, more than half our wine, and more than a quarter of our oranges. 97% of fresh fruit and vegetable in our shops are locally-produced.

And who is the great threat to our food producers? Which imports threaten to undermine our “food security”? We’ve all heard about the Chinese, with their crops fertilised with human excrement and the liberal use of melamine in food that’s not even fit for dogs. Well, don’t choke on your sauvignon blanc or your piece of cheese but it’s those evil Kiwis who are actually the biggest food importers into Australia.

In fact, Barnaby Joyce last year put out a press release declaring himself “baffled by the revelations that China is now the second biggest importer of food into Australia, behind New Zealand” (Joyce is perhaps easily baffled). How far behind New Zealand were the Chinese? In 2007-08 New Zealand-sourced imports were 19% by value of all our food imports, and China’s a little over 7%. And New Zealand continues to grow its imports – the Kiwis were only 14% of our imports in the 1990s.

Bit harder to conjure up a xenophobic threat when it’s the Kiwis involved, eh?

There is, in short, no “food security” issue. It’s a confection by politicians peddling xenophobia and industries looking to justify special treatment — like the irrigation industry using it to justify retaining the enormously expensive over-allocation of the Murray-Darling. Kate Carnell says the Food and Grocery Council “doesn’t want a government handout” — words that should make one automatically suspicious.

Carnell instead wants tax breaks for accelerated depreciation and more incentives for R&D — which are disguised handouts — and less regulation in areas like food labelling, which shifts costs onto the community. It was the AFGC, under former CEO Mitch Hooke, that lobbied the Howard Government to prevent Health Ministers imposing rules requiring GM labelling, which is why there’s an exemption that allows infant formula to contain GM products without parents being aware of it.

Contrarily, Barnaby Joyce reckons one solution to the problem of food security is more food labelling — the Nationals proposed last year to require country-of-origin labelling laws.

Needless to say, the breaking of the drought and a fall in the value of the Australian dollar won’t diminish calls for special treatment of the food industry. When it comes to the “strategic industry” argument, of which food security is yet another variant, there’s always a reason why local producers have to be protected from imports.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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10 thoughts on “Count Carl Gustav Wachmeister wants to cut your lunch

  1. Tom Mullin

    Oh dear god. I just went to ABARE and downloaded the numbers, but before I go into those, the idea ‘who cares if you have to import food’ is such nonsense that I don’t even know where to begin.

    First, you are at the mercy of the exporters who may decide not to sell to you. Russia, with its drought and fires is an example, simply stopped its wheat exports. If it is a choice between you starving and them, guess what they will do.

    Plus you have to pay for it. Now if your are an exporting superpower like Japan or China or Germany that’s ok. This is Australia we are talking about, which needs to borrow money every day to pay for its mortgages, oil, TV’s, etc, etc, etc. What happens in the inevitable day when we can’t borrow any more money? When debt to GDP is (say) 200% or 300% or … Or the inevitable US collapse takes out the debt markets and we can’t borrow at any price (as did happen in 2008).

    Then the food ships just turn round and go to somewhere else that can pay. And we starve. (Memo to self, must take Bernard out in a week long camping trip with just 3 days of food. Don’t forget to take a weapon to fend him off to stop him eating me.)

    3 days, the famous number, every society is only 3 days from collapse if the food stops.

    As per the numbers. Well we are not yet a net food importer (that will take until 2025 on current trends). But the trend is worrying. Since 2001/02 the proportion by dollar of imports to exports has risen from 20% to 37% in 2008/09.

    Apart from anything else, this is just another addition to our long term deterioration in our trade balance (oil being another one).

    Basically Australian (even allowing for the drought) food production is static, and yields are dropping as water, topsoil, cost of inputs, etc issues eat away at our production. Plus we have not done well in transformed food, if anything we are going backwards. And the population goes ever up. Trend lines all converging.

    So we sell raw stuff and import ever more transformed food. The raw stuff is basically fixed in volume and prices go up and down. The transformed food (some of it ours, which we send out as raw stuff and then buy back at a net loss as transformed stuff) steadily goes up in price. Plus the long term trend is for our yields (=production) to drop as water issues, land degredation, input costs (energy/fertilisers/etc) , etc start to dominate. Then there is global warming, the 5,000lb gorilla.

    On current linear trends we will have a net loss on dollar values of food imports/exports by 2015-2017. By 2025 (at the latest) we will be net importers by volume (as per the UK, Egypt, etc), waiting at the docks (which is history repeating itself as that is how Australia started out).

    Good cure for obesity though. Hint: the fat ones get eaten first, thighs are supposed to be the best parts, start checking out your neighbors carefully now and sort them into the correct categories (BBQ, soup, dogfood and so on) . Be thin yourself, you can run faster and you will be last, but don’t be too muscular though, lean protein is a premium product.

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