The Australia — New Zealand Farm Problem and the Appropriate Role of Government

Almost throughout the world, farm incomes tend to be low and unstable compared with incomes in other industries, except where heavily subsidised. This instability has become all the more serious because fluctuations have been around a long‐term downward trend in the fortunes of agriculture which commenced probably prior to World War I. The long‐run world‐wide farm problem is an inevitable consequence of economic growth, which results in a surplus of farmers, and especially of small farmers. We must recognise the quite intractable nature of the long‐term world‐wide component of the problem, as distinct from what can be blamed on our governments, and on the short‐term to medium‐term world market situation. Temporary assistance policy should centre on facilitating adjustment. The ad hoc, inefficient and inequitable palliatives of the past should be avoided. Short‐term assistance should be consistent with longer term objectives for industry development: it should not include output‐based subsidies that encourage continued overproduction and usually provide most assistance to those in least need. The emphasis should be on welfare‐type assistance based on the individual rather than industry‐wide aid.