Search

Aussie fleece no longer golden

Australia needs its farmers, or so we are told. They feed us, earn lots of export dollars and populate the less pleasant parts of the country far from the coast.

But, there might also come a time when a few people start to question whether Australia can afford its farmers.

Over the past ten years or so, there have been a series of events which have cost the country dearly – each caused by bad decisions from the farming community.

More bad decisions are being made today because farmers threaten to dump governments which do not give them what they want.

That, of course, is democracy but it is not necessarily leading to good decisions by government.

Briefcase knows this is a politically incorrect argument, but what the heck. Let’s drag it into the open and see who howls the loudest.

The most interesting current case is Telstra.

Farmers, it seems, love a govern-ment-owned telephone company.

Through the National Party, they are threatening to block the full sale of Telstra. Why?

Ask the same question of a few other matters.

Why did Australia’s farmers block the float of AWB Ltd (the former Australian Wheat Board)?

Why has the wool industry been depressed for ten years?

Why are dairy farmers getting huge payouts to re-structure?

The common thread is that Australia’s farmers think they can control the marketplace, just like the good old days when collectivism and agrarian socialism were popular theories – like back in the 1930s.

Creating an artificial market for wool with a price pegged at $8.75 a kilo was the loopiest example of this train of thought.

Many farmers still don’t get it, but they almost killed their own industry and certainly destroyed many farming families with that scheme.

The AWB decision, which would have made many of them richer, and been a step down a competitive pathway, was really all about trying to keep control of a market through a collective trading company.

Telstra, and the refusal to see that the world of communications has changed spectacularly, is another example of trying to stop the world from moving too quickly.

Farmers think that retaining Telstra will force the government to give them a better service.

Wrong.

The days of governments owning telephone companies is as relevant now as the time when they owned fish and chip shops (which, believe it, or not the WA Government once did).

Hanging on to 51 per cent of Telstra would be an appalling decision, eventually costing the country more than the wool-price support scheme.

What the farmers fail to understand is that the world is an infinitely more competitive place than it was twenty years ago.

It is also moving much faster than they understand and government agencies just cannot keep up with the demands for capital and innovation.

Login

(existing subscribers)

The password field is case sensitive.
Request new password

Add your comment

BNIQ sponsored byVelrada

Total Shareholder Return as at 30/06/16

1 year TSR5 year TSR
310thLendlease17%20%
440thWestpac-2%13%
461stTelstra-4%21%
489thQantas-9%19%
737 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Revenue

6th-Telstra$26,607.0m
7th↑Westpac$21,642.0m
9th-Qantas$16,200.0m
10th-Lendlease$15,350.3m
77 listed non wa companies ranked by revenue.
Source: Morningstar

BNiQ Disclaimer