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Why Is Farming in Crisis?

by E M

posted in Business

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Anyone following the news over recent months or even years might well have noticed a surprising degree of commonality in aspects of global farming news.
Of course, certain elements of agriculture have always had a global dimension.
Examples that spring to mind might include genetically modified crops, yields, global water supply concerns and so on. Yet more recently a surprising 'social dimension' has come to the fore in many countries and that relates to the economic viability of farming as an industry.
Cross country issues
At the time of writing, the news has been full of mass demonstrations by farmers in various parts of France protesting at what they describe as the unsustainably low price of milk. This has resulted in the blocking of major city centres and the dumping of agricultural waste products in or around supermarkets.
In the United Kingdom, there have been similarly vociferous protests from farmers over prices for milk and a wide range of their other produce.
There is also widespread discontent over broadly similar issues in countries as far apart and diverse as the United States and Australia.
The causes of concern
Whether the particular item under discussion is milk, cereal or meat, the common theme across all these disputes is farmers protesting that they are unable to get a price from the marketplace that is sufficient to maintain their existing standard of living and farming businesses.
They also can't invest in developing their own business going forward, so there is a knock-on effect on things such as farm machinery sales
Right across the planet, the blame for this situation is laid at the door of the vast global supermarket chains and their perceived ability to suppress market prices to levels that are simply unsustainable for farmers in terms of survival.
Yet as a these global markets are so significantly different from one to another, it isn't intuitively clear why the same downward pressures on prices should be having such dire effects in a wide range of diverse countries.
The public is overlooked
The supermarkets have responded, to the predictable dismay of the farming communities, that they are not the guilty parties and that they are only reflecting consumer demand for ever-cheaper food.
In fact, although the supermarkets might be overstating this somewhat and very specifically ignoring their own profit margins, there is a grain of truth in that position.
It's very easy to say that the consumer should be required to pay more for food in order to provide the supermarkets with profits and the farmers with a living income but this in turn hides a very basic flaw in much of the global economy's health.
That flaw is that there are simply far too many poor people in the world, including in the so-called developed world. They simply do not have the money available to spend more on food in order to support supermarkets and behind them the farmers.
The global crises since 2007 have led to increasing poverty levels and that, in part, explains a large chunk of the public's resistance to the idea of higher food prices and their purchasing decisions that pressurize the supermarkets.
Ultimately, what the supermarkets and farming industry together might need to realise is that their woes are a reflection of a lack of distributed wealth in our society and that trying to 'squeeze the consumer' more is not going to be the answer.
What is needed is a substantial overhaul of our global economic systems in order to avoid adopting the 'easy' solution of trying to dig further into the largely empty pockets of the consumer.
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