The Impacts of Deregulation and Agricultural Restructuring for Rural Australia

Article excerpt

As a leader in the Cairns Group of Nations, Australia has been advancing deregulation in agri-food trade. Successive governments have assumed that Australia would benefit from a greater deregulation of international trade because this would allow increased access to world markets for primary agricultural commodities. But regulation exists, at least in Europe, to protect the social value of the rural landscape. Australian governments, strongly influenced by economic rationalist ideology, have given insufficient consideration to the rural social landscape. Little critical reflection has taken place about whether Australia, and its farmers, would actually benefit from deregulation, or what the social impacts of this trend might be. Deregulation inevitably invokes structural adjustment, forces farmers out of agriculture, depopulates rural areas, and creates social hardship. There are also environmental ramifications. The exit of farmers from agriculture has not been as fast as was expected by economists and policy-makers, with many farmers adapting to new situations.

Introduction

This paper considers one dimension of globalisation, deregulation in agriculture, and its impacts on rural Australia. The restructuring of agriculture is a primary outcome of deregulation and is itself a major cause of impact on rural communities. Deregulation and restructuring are only two aspects of the complex phenomenon of globalisation (see Gray and Lawrence 2001, Tonts 2000). While globalisation may bring many benefits, it also has adverse impacts, which--although aired by demonstrators at World Trade Organisation (WTO) meetings, outside the World Bank, and at various economic summits, and which arguably spawned the One Nation Party--are not seriously considered by many economic analysts (an exception is Dragun and Tisdell 1999). This paper will concentrate on deregulation and restructuring in agriculture and their effects on rural Australia. Market reform, including the abolition of subsidies and protection, is a major part of globalisation. The argument is that it is inefficient to protect or subsidise industries, and that such practices distort the economy. Whatever the logic, since Australian agriculture developed in a protectionist regime, the structural adjustment that is occurring now is having a large social impact on rural people and on the environment. The logic of globalisation and the logic promoting deregulation and structural adjustment fails to consider the externalities--the social and environmental consequences that escape a market analysis. Even if the end-state was desirable--and that would depend on the values of the analyst and the way the change actually occurs--there is considerable hurt induced through the process of change. Over the last 20 years or so, rural Australia has experienced that change and that hurt, what Gray and Lawrence (2001) call a "global misfortune".

Some farmers have seized opportunities, invested in non-traditional crops, developed niche markets for higher value commodities, or otherwise benefited from globalisation. Others have exited agriculture and have serviced the growing tourism industry in rural areas (often amidst the scorn of their peers). Despite all the success stories, restructuring of agriculture has meant the exit from agriculture of about a quarter of Australia's farmers (1), about 2,000 every year (Garnaut and Lim-Applegate 1998), and it has meant new challenges for continuing farmers. Even if those who exit are better off--as is claimed by some anecdotal and research evidence--the process leading up to the decision to quit the farm is very painful (Bryant 1992). And while some continuing farmers are adapting and profiting from the new challenges, others (probably the majority) are finding the going tough (Gray and Lawrence 2001).

The implications of globalisation on agriculture are only one element in the multiple economic and political tiers of globalisation. …