The drought goes on and is now record breaking in many areas but I hear from many farmers concern about the way support unfolds during major drought.
I am sure all farmers greatly appreciate public concerns and would do nothing to diminish the support but I wonder if there might be a more effective way to get help to farmers.
It is as though Governments have lost the policy settings of the last 50 years with the National party leaving a vast swag of farmers without any real support.
The major issue is farmers are not an homogenous group but fall into three main groups, firstly 50 per cent get the majority of their income off farm, secondly those who have gross farm proceeds above $400,000 per year or little debt that access Farm Management Deposits (FMD) and those in the middle who cannot access either.
Most farms are businesses that require cash flow to survive and that is the first casualty of drought. Your income dives and your costs go through the roof, that is why the transport subsidies are so helpful as the ameliorate the cash outlay to either buy feed or send stock to market or adjustment. The other assistance measure was the old exceptional circumstance ( EC) relief that was some help with interest payments.
Normally when a fair dinkum drought occurs, the banks close down cash flow and although there are positive words coming from banks, this time we are yet to see if it is more than window dressing. The old EC was paid to the banks so they let farmers continue to trade. Barnaby Joyce was very pleased to kill these off when he was Minister and replace them with loans, which is the last thing a farmer needs when your cash flow dives.
I regularly hear policy makers say you cannot prop up farmers and I recall then Prime Minister John Howard telling me and other state farm presidents the same thing just prior to us convincing them to put over $4 billion into EC support. Drought policy is difficult because all farmers are in different financial positions.
Those with little or no debt can mange drought better and usually have significant reserves in FMD.
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The quantum figure is often quoted, which runs into the billions but the numbers of farmers who have them is not and they are not considered a subsidy even though they cost Australian taxpayers forgone tax. They are an excellent tool and should be retained but it is only the wealthier farmers who can use them.
Current Government policy agenda will push Australian agriculture down the US model of only big corporates or huge family farms, with no room for smaller farmers and new younger players. My community has lost nine families in recent years to big players coming into our district and buying up the smaller farms.
If the National party want small family farms they had better change current policy settings on drought and get some real help on the ground.
- Mal Peters
