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Institutional paralysis

Human pressures on the land resource and the responses to those pressures should reflect community beliefs (symbolic statements about reality) and values (symbolic statements about what is right and important), including the beliefs and values of landholders (drawn from Rogers et al 1988; see also Gleeson et al. in press). These beliefs and values are mediated through institutions including the traditions, norms and practices of groups, the organisations formed by government, industries and communities and their policies and programmes, including laws, regulations, codes of practice, and the operation of markets (Ball 1996).

The policy positions and actions of governments (and of many farmers) lead us to accept, for the purpose of this commentary, that there is support in the community for actions to improve the condition of land, or at least to arrest deterioration in the condition of land; that this is not happening points to the need to change institutional arrangements driving the pressures on the land resource and the responses to those pressures. 

The meaning and significance of landscapes cannot be divorced from human experience and culture. Hence it is not surprising that agricultural considerations have had a substantive influence on how we value and relate to rural land, and on the institutions operating in the ILZ.

By the mid-nineteenth century, the domination of rural landscapes by agriculture had lead to the establishment of an extensive array of institutional arrangements governing agriculture. These arrangements have remained largely unchanged since that time. They are underpinned by valuing the ‘development’ of our natural resources, in part for the sake of economic prosperity and in part by the desire to ‘tame our landscapes’.

Agricultural mindsets dominate institutional arrangements for rural Australia and, in turn, the beliefs and values that underpin agricultural activities are reinforced by the institutional arrangements they spawn. This reinforcing loop, leading to institutional paralysis, can be illustrated in several ways.

Firstly, the reinforcing loop between agriculture and institutional arrangements is illustrated by our common misuse of the term ‘rural’. Rural is a place term, yet agricultural interests frequently capture it, such as in the naming of the rural research and development corporations. Although termed ‘rural’, the charter and activities of these organisations are almost exclusively agricultural. They rarely deal with the wider rural domain.

Secondly, the productivist nature of agriculture leads to private and public organisations and policies, again such as occurs with the rural research and development corporations, to serve single or closely-related agricultural industries. This industry-by-industry approach does not take account of the fact that more than 70 per cent of agricultural production is produced on farms operating more than one agricultural industry (Gleeson et al. in press). Furthermore it does not reflect the strong spatial dimension of environmental management requiring whole of farm, catchment linked institutional arrangements. Hence, whilst industry-by-industry institutional arrangements might well suit various product chain related requirements, they are not well aligned to meeting the requirements of good land management.

The third illustration of how beliefs and values are reinforced by the institutional arrangements they spawn lies in the portrayal of the results of much of the analysis of the financial performance of the agricultural sector. In simple terms, much of the portrayal of these analyses seeks to establish a ‘high’ ground for agriculture, a platform built upon more favourable understandings of financial performance than is the reality.

In 2005 the Productivity Commission reported that ‘ … in real terms, the value of agricultural output increased two and a half times over the four decades to 2003–04’, but this conclusion appears not to have accounted for lower product prices. Similarly ABARE (ABARE 1999) favourably portrayed the growth in the value of farm production as follows:  ‘Between 1955–56 and 1998–99, despite falling real prices for farm product, the real gross value of farm production rose by over 25 per cent’. On an annual basis, this is a growth of just less than 0.6 per cent.

Caution is needed in interpreting short-term changes in agricultural statistics due to the substantial volatility in seasonal conditions and in the prices paid for agricultural products. Nevertheless, the past pattern is reasonably clear and it is not accurately reflected in the foregoing quotes.

Using regression analysis, Gleeson and Piper (2002) calculated that during the period 1980–81 to 2002–03, national gross domestic product (GDP) rose by 109 per cent in real terms, while the corresponding figure for farm GDP was an increase of just eight per cent in real terms; with farm GDP now contributing about three per cent of national GDP. The increase in the real value of agricultural production over the past two to three decades has been marginal, notwithstanding substantial increases in the volume of agricultural production and in spite of fairly constant levels of investment and minimal changes in real farm costs. Furthermore, notwithstanding the increase in the volume of production, aggregate net farm income has fallen substantially (Gleeson and Piper 2002; Synapse Research & Consulting and Bob Hudson Consulting 2005).

Another example of a striving for the ‘high ground’ is the recent publication by the Australian Farm Institute of a study titled The Farm Dependent Economy (Econtech Pty Ltd 2005). This analysis attributes to the farm economy post–farm gate manufacturing and service inputs, hence enabling interpretations that elevate the apparent importance of the farm sector at the expense of other sectors (see Watson 2005).

This capturing by farm sector analysts of inputs from other sectors is not new; it is embedded in national export statistics.

ABS (1996), DPIE (1997), SCARM (1998), NLWRA (2001a) and O’Brien (2002) have all reported that between 70 to 80 per cent by value of Australian agricultural products is exported, leading to an understanding that agricultural exports represent about 20 per cent by value of all Australian exports. More recently the Productivity Commission (2005) reported that ‘Whilst agriculture’s output, employment and investment shares are broadly comparable, its share of exports is considerably greater, being more than five times greater than its output share’.

These export statistics are computed by comparing values of products as they leave the farm (farm gate values) with values of products at the point of export (export values) hence heightening both the contribution of the farm sector to exports vis a vis other sectors and also the proportion of farm products seemingly exported.

In a similar vein, reports about the export performance of the ‘farm’ sector rarely note that, misusing the same farm-centric terminology, ‘farm’ imports are about half as much as the value of food and fibre exports, with net exports in 1996–97 being valued at about $12 billion (ABS 1998).

Not only do agriculturally related organisations portray agriculture in a favourable light, they portray the economic woes of the sector as being due to external forces, to such as adverse terms of trade, ‘unfair’ trading practices and drought and floods. In so doing they ignore the inevitability of the changing position of agriculture in maturing economies as the demand for price elastic services outstrips the demand for relatively price inelastic food and fibre products (Watson, in press).

Intentionally or otherwise, the analytical and interpretative limitations described above and the externalisation of the causes of difficulties act to sustain an artificially elevated impression of the economic performance of the agricultural sector. This then creates pressures for the maintenance or expansion of agricultural output, with continued or expanded pressure on the land resource. For example there is increasing pressure to ‘develop’ northern flowing catchments and, ironically given the current oversupply of grapes, a recent report (Pratt Water 2004) advocates use of water ‘saved’ through improvements in water infrastructure for expansion of viticulture in the Murrumbidgee catchment in New South Wales.

Polarisation of views develop wherein farm organisations and their support agencies respond defensively to environmental concerns. In turn, governments respond by creating more legislation or another short-term prescriptive support programme. Farmers and their organisations, with some considerable justification, point to the pressure placed on them by governments to improve land management without there being equivalent pressure on the practices used by those same governments, for instance in relation to the use of fossil fuels in government owned energy production businesses (see ABC Landline 2005).

Institutions reinforce the beliefs and values that lead to their creation, hence crowding out other understandings of reality. Feedback loops between beliefs and values and institutions lead to institutional paralysis and a reduced ability to alter the pressures on the land resource and to respond to those pressures.

Given our less-than-admirable track record in designing responses to better meet the pressures on the land resource, more attention might be directed towards understanding and modifying the drivers leading to those pressures. We believe this would lead to fundamental improvements in the design of institutional arrangements related to the management of the land resource.

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