Drought policy leaves farmers high and dry

17 Jan, 2014 04:56 AM
After six years of review, national drought policy is still in the 'developmental' stage

ONCE or twice in a lifetime, most farmers encounter a drought that cannot be prepared for. But there is no certainty on aid policy after six years of review writes National Farmers' Federation president BRENT FINLAY.

OPINION: DROUGHT does not arrive overnight. Despite high-level comment from politicians and academics on the ongoing and worsening conditions across Queensland and New South Wales making national headlines in recent weeks, this drought has been insidiously whittling at our farmers for two years.

The impact of this weather disaster has also infiltrated the livelihoods of the many communities founded on primary production. Australian farming is a long-term, financially viable industry providing the backbone of rural communities, feeding our population and supporting our international terms of trade.

Australian farmers build preparing for drought into their business models – it is a factor inherently part of growing food and fibre in the Australian environment. However, once or twice in a farmers' lifetime a drought extends beyond what is at all possible, or should reasonably be considered possible, to prepare for.

In 2014, the rural industry finds itself at such a point.

Compounding the severity of this situation for many businesses is the flow-through effect of the disastrous suspension of live cattle export to Indonesia.

The legacy of this grave error of judgment continues to haunt the northern beef industry.

However, this drought also marks a weighty challenge for our governments and the adequacy and appropriateness of their drought policies comes under scrutiny. The previous Exceptional Circumstances (EC) arrangements, while criticised by some academics, did provide a level of certainty to both primary producers and governments when faced with rare and severe drought events. It also helped sustain regional communities when under crippling social and financial pressure.

At this point in time, I do not advocate a return to the old framework, however it must be made clear that no transition phase was provided following the snap removal of the EC Interest Rate Subsidy two years ago, nor has there been a suitable replacement for EC delivered by government.

Governments and farmers need to work collaboratively and commit to a mutual obligation in respect to drought policy and management. In keeping with this, farmers should demonstrate a commitment to sustainable and self-sufficient farming through appropriate business and farm management while governments should commit to appropriate policy platforms and long-term funding support.

While I believe the majority of farmers in affected regions are doing what they can to best manage the current drought, government's response is lacking.

After six years of review, national drought policy is, frustratingly, still in the 'developmental' stage.

Early last year the federal, state and territory governments signed up to the national drought policy, with this reform to come into effect on July 1, 2014.

The reform is rightly focused on improving preparedness for future droughts, however does not provide certainty as to in-drought business support. Instead, on the table we have only a series of principles upon which support could be provided if needed. This is not enough. As drought challenges the short-term viability businesses in the rural sector in some of our key agricultural production areas, we now urgently require clear and targeted support measures.

I have little doubt a government response to the current drought will inevitably lead to claims from poorly informed commentators Australian farmers are already heavily subsidised and merely seeking handouts. This could not be further from the truth.

Australian agriculture competes with other sectors for human, land and capital resources, while contributing $48 billion to the national economy annually. Furthermore, Australian farm businesses have faced a more risky operating environment that has been the case anywhere in the world over the past 40 years.

Despite this challenge, our primary producers have consistently found productivity improvements greater than many other sectors of the economy and sought to meet the increasing community expectations pertaining to the environment, animal welfare and sustainability.

As the current prime minister previously acknowledged, strong performance of the agriculture sector was a key factor in Australia avoiding the global financial crisis.

Australian agriculture also has a proud tradition of innovation and adapting to changing environmental and market conditions and has achieved the greatest productivity growth rates of all sectors of the economy with next to no government assistance.

In fact, the OECD states Australian farmers receive the least assistance from their government compared to other nations.

Australian farmers are good at farming, it is one of our clear strengths, and as recently outlined by a Deloitte report on the future waves of the economy, we hold a significant competitive advantage over other farming nations – this will benefit all Australians, not just farmers.

The only thing that will bring the current drought in the end is rain, of this we can be sure.

However, as we await a change in the weather there is much that can be done to ease the pressure bearing down on our farmers and rural communities.

Brent Finlay is president of the National Farmers' Federation.

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Peter Holding
17/01/2014 1:45:11 PM

For all the criticism of farmers failing to prepare adequately for drought, I have to say that the govt's preparedness of clear drought policy,from both sides, is unfortunately no better.
Bushie Bill
17/01/2014 2:21:34 PM

Once or twice in a lifetime, most shopkeepers, or electrical businesses or shoemakers or non-farm businesses, encounter a recession that cannot be prepared for, Brent. What sort of public purse support do you propose for those industries and business sectors? If "Australian farming is a long-term, financially viable industry providing the backbone of rural communities, feeding our population and supporting our international terms of trade" and droughts are virtually guaranteed, how about you bozos do some self-insuring or talk about a national profit- seeking drought insurance scheme?
Bushie Bill
17/01/2014 2:30:00 PM

PH's post is telling. He is saying farmers won't look after their own interests so governments have to do it!. Brent Finlay's article is incredible for no other reason than its "air of entitlement" and its super-developed "you owe us a living" agrarian socialistic traits. We owe you nothing, if you are too stupid, too lazy or too greedy to show some interest in your own future welfare. It is high time the inefficient were driven out of farming for the good of all efficient farmers and non-farmers alike. If you want support, sit outside the post office with your ratty rugs and begging signs.
18/01/2014 8:08:59 AM

Congratulations Bushie! This the first of your posts I have noticed where you actually made a sensible suggestion for an alternitative. Unfortunately, it will fall on deaf ears and handed to sightless eyes. Back in 1985, I drafted a draft for a rural disaster insurance and investment scheme. The Libs of the time praised it but said it could never be implemented because it was too socialist in nature.
Rob Moore
18/01/2014 9:31:32 AM

Seems a fair assessment to me Brent.Preparing for drought is a "myth"while we are getting these pathetic "farmgate" returns. That is our No1 problem and this drought has gutted us like never before because all our reserves of money, energy and help have been used and the forced selloff of stock is hitting a secondary stage that is flooded and has no need to compete whatso ever. Milk ,meat food generally is in demand but the contrived marketing models that have become entrenched over last 20 years will NEVER allow true competition again. That is why we must get PPP Bill in by July1 to g us hope
Rob Moore
18/01/2014 9:45:16 AM

BB True market value by virtue of competition will give me a true market signal that my product is oversupplied or is selling that well that I can make a TRUE commercial decision.If 10% of us decided to walk off and leave to banks- It would collapse the whole economy and value of the greater landmass of Aust 90% live within 200kms of seaboard. It would only leave the quarry to pay our interest.I am the typical small family Business and @55yo I have been completely swept off my feet by events of 2013. I am about 6 months off having nothing except land to my name- due to high costs and low retur
Rob Moore
18/01/2014 9:55:29 AM

(cont) returns. We have been putting $4-700000 of real gross products out each year that are worth 80% more than that downstream. If I have to watch the rest of my stock starve due to the lack of help- so be it-I'll survive am capable and -don't think that I could sell as if I can't make a go of it- nobody else can and it will leave the lot to foreigners to come in.I am lot begging the likes of you Bushie Brain- if I stop - I won't be restarting again as the saying goes- Once bitten -twice shy. So all you armchair experts do have a choice- just make up your minds asap and let me know!
18/01/2014 6:51:10 PM

Nobody is forced to stay in any business that is not viable.If the nature of the business prevents a person from making money ,very simple, move out.Droughts are the normal thing in Australia in 90 percent of the land mass.Lifestyle sucks if you struggle to live, some properties are better than others , same thing for businesses, when the going gets tough the banks sell you up ,move before the banks move you, its that simple.
the advocate
19/01/2014 4:56:25 PM

Bushie I know what you say but some of us lobbied to have ec extended to rural small businesses -it was, but in a more modest way. However, even when the small businesses did not have access to their own scheme, I found that nearly all of them supported farmers getting e.c. as the improved farmer spending helped keep their businesses going.
20/01/2014 7:56:18 AM

The current pathetic returns for agricultural production is a pretty clear indicator of over capacity.Hopefully this drought will knock out uncompetitive producers and reduce supply.Under no circumstances should the taxpayer bail out the inefficient.The treasury cannot stand behind every failed business enterprise in Australia.
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You had better check your sources ATB!
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