What If We Subsidised Food Like We Subsidise Fossil Fuels?
Australia spends billions propping up the fossil fuel industry. Tax breaks, direct subsidies, infrastructure support—the numbers vary depending on how you count, but estimates consistently place government support for coal, gas, and oil in the tens of billions annually. Meanwhile, our food system receives comparatively modest support, despite agriculture being fundamental to survival in ways that petroleum never will be. What would happen if we flipped that priority? What if governments subsidised fresh food production with the same enthusiasm they currently reserve for gas extraction?
The Current State of Play
Australian fossil fuel subsidies are substantial and multifaceted. The Australia Institute estimated total fossil fuel subsidies at around $11.6 billion in 2021-22. This includes things like the fuel tax credit scheme, which cost approximately $8 billion that year, along with various state-based support measures, infrastructure investments, and tax concessions.
Meanwhile, agriculture does receive government support, but it’s structured differently and operates at a different scale relative to the industry’s importance. Farm subsidies exist, disaster relief gets deployed during droughts and floods, and research programs receive funding. However, these rarely aim to make fresh, nutritious food cheaper at the checkout. Instead, they focus on producer viability, export competitiveness, and crisis management.
The result is a system where a litre of petrol—refined from crude oil, shipped internationally, and distributed through complex infrastructure—can cost less than a litre of fresh juice. Our subsidy structure treats fossil fuels as essential infrastructure requiring support, whilst treating food as a commodity that should operate under pure market forces.
What Would Food Subsidies Look Like?
Redirecting even a fraction of fossil fuel subsidies toward food production could take several forms. Direct payments to fruit and vegetable growers could reduce prices at the farm gate, making fresh produce more affordable for retailers and consumers. Subsidised distribution infrastructure could reduce transport costs, particularly for regional areas where fresh food is expensive partly due to logistics.
Investment in processing and storage facilities could reduce waste. Currently, enormous quantities of perfectly good produce get ploughed back into fields because harvesting and transport costs exceed market value. Cold chain infrastructure, local processing facilities, and better storage could capture this waste and convert it into affordable food.
Subsidies could support farmers transitioning to regenerative practices that improve soil health and long-term productivity. Rather than propping up unsustainable practices, government support could reward farming methods that enhance land quality whilst producing nutritious food. This creates a double benefit: environmental improvement and food security.
Targeted subsidies could make specific nutritious foods dramatically cheaper. Imagine if every Australian could access fresh vegetables, legumes, and grains at a fraction of current costs. The health implications alone would be transformative.
The Return on Investment
Calculating ROI on food subsidies requires looking beyond immediate fiscal returns to broader economic and social benefits. Healthcare savings represent the most obvious return. Diet-related diseases—obesity, type 2 diabetes, cardiovascular disease—cost Australia’s healthcare system billions annually. The Australian Institute of Health and Welfare estimates obesity alone costs around $11.8 billion per year in direct and indirect costs.
If food subsidies meaningfully improved national diet quality, healthcare savings would be substantial. Studies consistently show that better nutrition reduces chronic disease prevalence. Even modest improvements—say, a 10% reduction in diet-related illness—would generate billions in savings, potentially offsetting subsidy costs within years.
Productivity gains would add further returns. Healthier populations work more effectively, take fewer sick days, and remain in the workforce longer. Childhood nutrition affects educational outcomes and lifetime earning potential. The economic multiplier effect of a healthier, more productive population is difficult to quantify precisely but undoubtedly significant.
Food security itself has economic value. Australia is generally food-secure at a national level, but many individuals and regions face genuine food insecurity. Natural disasters, supply chain disruptions, and economic shocks expose vulnerabilities. Robust, subsidised domestic food production provides resilience that has tangible economic value when crises hit.
Regional economic development represents another return. Agriculture employs people in rural and regional areas where alternative employment may be scarce. Supporting food production maintains rural communities, prevents urban overcrowding, and preserves agricultural knowledge and infrastructure. These social benefits have economic dimensions that pure market mechanisms don’t capture.
Environmental returns matter too, though they’re harder to monetise. Sustainable food production supports biodiversity, maintains soil health, sequesters carbon, and protects water systems. Regenerative agriculture can improve land whilst producing food. These environmental services have long-term economic value that markets typically ignore.
Feasibility and Challenges
Implementing large-scale food subsidies faces real obstacles. International trade agreements limit some subsidy types—the World Trade Organisation restricts certain agricultural supports to prevent market distortion. However, plenty of subsidy structures remain available, and many nations already subsidise food production extensively without violating trade rules.
Political resistance would be substantial. Fossil fuel industries have powerful lobbies and deep political connections. Redirecting their subsidies toward food production would face fierce opposition. Additionally, some agricultural sectors—particularly meat and dairy—already receive indirect subsidies through various mechanisms. Restructuring these could prove politically complicated.
Implementation complexity shouldn’t be underestimated. Designing subsidies that support nutritious food without creating perverse incentives or excessive waste requires careful policy design. Simply throwing money at food production could lead to oversupply, market distortions, or environmental damage if not properly structured.
The phasing question matters too. Abruptly removing fossil fuel subsidies whilst implementing food subsidies could cause economic disruption. Workers in fossil fuel industries need transition support. Supply chains need time to adapt. A realistic implementation would require years of gradual adjustment.The Bigger Picture
Beyond pure economics, subsidising food instead of fossil fuels represents a values statement. Current subsidy allocation says we prioritise cheap energy over accessible nutrition, despite knowing that poor diet kills more Australians than most other preventable factors. It says we’ll spend billions supporting industries contributing to climate change whilst treating food security as an individual responsibility rather than collective priority.
Australia has unique advantages for food production. We have vast agricultural land, diverse growing conditions, strong existing agricultural knowledge, and relatively low population density. We’re already a significant food exporter. Leveraging these advantages with strategic subsidies could position Australia as a leader in sustainable, nutritious food production whilst improving domestic health outcomes.
The COVID-19 pandemic revealed how quickly supply chains break down and how valuable domestic production capacity becomes during crises. As climate change intensifies, food security will become increasingly critical. Investing in robust, sustainable food production now provides insurance against future uncertainty.
Food subsidies needn’t completely replace fossil fuel subsidies tomorrow, but shifting priorities incrementally seems both feasible and beneficial. The return on investment—measured in health, productivity, resilience, and environmental quality—likely exceeds what we currently get from supporting coal and gas. The question isn’t whether we can afford to subsidise food production, but whether we can afford not to.
