single desk problems abound, page-7

re: weaknees Dairy is an interesting one WK. It is different to the grains sector in that supermarkets don't really control the price of grain as it is a much more globalised trade. The process of deregulation is almost always followed by a period of 'rationalisation'. This is where the marginally profitable and inefficient operators in which the system has carried inevitably are forced to leave the industry. I am sure you understand that. This happened with NZ in 1984. Complete deregulation of the entire economy. And a great deal of pain hit the NZ agricultural sector following this. But how that sector has turned around since. Now you have New Zealand dairying interests moving into Australia's dairy sector with glee as the deregulatory process produces fire sales and a great way to diversify their milk production base away from pasture and into grain based as well.

Now how can anyone with a heart advocate rationalisation (as a result of deregulation) when we are talking about families that essentially going to go to the wall and in a very painfully and emotional process? Well whilst tragic and regretful, some businesses are not receptive to change and hence should not be subsidised at the expense of the more dynamic operators as in the end the whole industry is left liable to damage. I might sound like a mongrel at times but it is merely my sense of impatience because I firmly believe you have to want to help yourself in business before you deserve any socialistic form of support. Really if grain prices hadn't started to rally this year, there would have been some fire sales this time next year I could have guaranteed that.

But with the dairy industry there are issues beyond political that are causing the pain most significantly water costs and water availability. So there is also the arguement do you protect an industry that the natural resource base cannot sustain in the long run anyway. And of course energy is hitting the dairy industry big time. So if water prices double and oil prices double or lets imagine worst case triple, is the industry sustainable anyway? But all sectors are facing it and regulation is not the way to deal with it. Like subsidising fuel. In the end you will not be able to sustain that.

It is interesting and it is a topic I am passionate about. I love agriculture and I can't wait for the day when it is the stand out commodity performer. Hopefully 2006 is that year. China and India are the key. If they start importing, boom times will follow. Good luck!