The Australian Prime Minister, John Howard, has just announced a $350 million extension to the government’s drought relief measures and for the first time offering the same aid to Australian irrigators as well crop and dairy farmers.
Farmers become eligible if the drought is a one in 20 or 25-year event and results in a substantial downturn in earnings for more than 12 months.* The assistance, known as exceptional circumstance (EC) assistance, can come as a dole payment and/or interest rate subsidy. There are various criteria that must be met including that the farmer derives at least 50 percent of income from the farm.
Since 2001 the federal government has provided $1.2 billion to more than 53,000 farm families in EC assistance.
With the new announcment 18 of the 65 regions already drought declared will get an 18 month extension in interest rates subsidies and other direct relief from end of this year to the middle of 2008.*
There are those who argue that farmers should not receive drought aid. I received the following note from a reader:
“So why should we support a safety net for our rural producers. Businesses in the city just go broke and are not bailed out. Is agriculture about capitalising gains and socialising losses. Are these some of the reasons:
• the regional economic effect of drought can distroy whole rural towns and regional communities
• rural Australia is worth preserving because it is the only part of Australia that looks and feels Australian.
• food production so special security case
• national ethos identifies with the bush
• global markets aren’t level anyway (EU and US agricultural subsidies) so this helps even things up for the worst climate variability in the world
• drought assistance is not seen as a subsidy in world trade talks
• Australian farmers are still transitioning to self reliance model – need time to adjust
• tax system still not optimal for climate risk management – change June to December, more income equalisation ideas
• urbanites expecting unrealistic environmental dividends from the bush that add to costs
• animal welfare
• human welfare
• high interest rates need subsidy because high rate is due to mining and urban prosperity both of which force up rural wages
• resources in the bush are sticky – market reacts slowly, so subsidy can ease pain
• drought subsidies make the coal industry feel better or at least might stop farmers suing coal miners.
• the National party has to be seen to have a winner or you end up with more extreme parties emerging, for example One Nation.“
And I received the following note from another reader:
“What have lessons have Australians learnt from drought. And what new lessons await if we entering a new world of climate change or even experiencing for the first time natural variability unknown to Europeans. Do we need a new road to follow?
The Road from Coorain is an autobiographical story of Jill Ker Conway’s isolated childhood and youth in Australia. In 1930 Jill Ker Conway’s newly married parents bought the remote sheep station of Coorain. When Jill reached the age of eight, Coorain was struck by a devastating series of drought years in which most of the Kers’ sheep were lost.
Jill’s father died when she was at age 11 (suicide or fixing a pipe in a farm dam), and the grief-stricken family, overwhelmed by the series of disasters, left their beloved home and moved to the city of Sydney. A good call for Jill who became a famous academic and historian. But many families don’t move on.
Perhaps the stoicism of the Australian character is too well entrenched for the good of man and beast.
Drought feeding of livestock doesn’t pay for big droughts. It can lead to unmanageable equity losses, the property and the family.
Of course not all droughts are caused by lack of rainfall. Small property sizes, debt and over-expectations from good seasons can lead to overgrazing. Overgrazing can lead to environmental degradation of the land, soil loss, increase in woody weeds and unpalatable grasses and long-term loss of carrying capacity.
Man made “drought” occurs when stocking rate exceeds carrying capacity (i.e. drought is not only rainfall-induced)
According to one state government:
Humans control stocking rate.
Nature controls carrying capacity.
Success in drought is achieved in the same way as at other times (e.g. using sound business management principles).
Have a plan.
Move early !
Watch out for unmanageable equity losses.
Look on mistakes as learning opportunities.
Preserve the resource base for financial recovery and future generations.All good sound stuff but not enough.
Over the last decade most state departments of agriculture have introduced climate risk programs with information about inherent climate variability and the use of seasonal climate forecasts (e.g. the SOI – Southern Oscillation Index which is a measure of the El Nino-Southern Oscillation). The Bureau of Meteorology and DAFF have facilitated that process further towards a theme of “self reliance”.
The idea is to give landholders an edge to see early warning signs and make decisions such as: sell livestock, plant less crop area, select different crop varieties or decide not to heavily invest in fertiliser and pesticide inputs.
But seasonal climate forecasting has at best 60-70% accuracy. Minority odds have to come up eventually and the forecast will be seen to be “wrong” in some years.
Lesson learned on Queensland’s Darling Downs include that out of 10 years – 4 break even, 3 lose money and 3 make a profit.
Some producers access income equalisation deposits to smooth out the tax stream but how much more is needed?
Should the tax year be moved from June to December. June is often not a good time to be pressured into decisions.
Protection of the resource base isn’t as simple as it seems either. South West Queensland graziers can protect the resource only to have it ‘finished off’ by kangaroos late in the drought. And the possibility of dry seasons can make graziers very hesitant to renovate pastures with fire which inevitably leads to woody weed buildup and/or woodland thickening.
Loss of productive pasture area then compounds with economic necessity to pressure the resource further. And how much green sympathy will you get?
So our future farmers have to get smarter – have farm business plans, use forecasts, more efficient agronomy, hedge on futures markets and develop a diversified income stream all while coping with a declining terms of trade and increasing environmental demands from an increasingly urban population.
Climate change may require a rethink on what a viable living area is, whether to install irrigation, and for long term industries – what variety of heat sensitive long-term orchard and vine crops to invest in. Some landholders can adapt by growing niche crops like Sandalwood but obviously not all.
But big multi-year droughts are in the end tediously dry. No amount of technology can compensate for zero water. And you don’t need a forecast to tell you you’re in a drought.
But it’s lack of money that finishes off farming dynasties. So the real answer is to have off-farm non-agricultural diversified income or one of the family working in town or on other properties elsewhere.
Today’s newspapers are suggesting farmers move north to where the water resources and rainfall are still abundant. A new environmental battle ground? Fleeing from Australia Felix?
Do we now have the technology to beat the heat, the insects, the isolation, the cost of shipped inputs and distance to market which comes with agriculture in northern Australia. If farmers are to move north do we need new infrastructure including a great port to Asia at Wyndham or the rail line extended from Katherine to Kununurra?
Sir Sidney Kidman had a view of drought proofing his operation by owning properties all the way from Victoria to the Kimberley. But El Nino can potentially take out all that country. Perhaps in the 21st century we can realise that dream for agriculture and pastoralism but only by doing a global Kidman and having on/off operations in Australia and Argentina thereby oscillating in harmony with El Nino. Then perhaps we can truly be Kings in Grass Castles.“
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* Some states, for example Queensland and NSW also have their own schemes ontop of the federal goverrnment’s EC. Queensland uses a drought 1 in every 10 years as basis for assistance declaration so farmers could be picking up EC assistance almost 25 percent of the time? so that state could be providing assistance 22% of the time when you factor in what rainfall it takes to revoke a drought declaration.
* Here’s the latest map with EC boundaries.
Jennifer Marohasy BSc PhD is a critical thinker with expertise in the scientific method.
Jennifer: There are various good reasons for ongoing rural assistance programs, perhaps the best one is keeping our country infrastructure running during hard times, another is keeping hard won experience working as it was out in the bush. Which ever way you look at it, who else is other than our farmers are so ready and willing to carry on minding any properties in decline?
Must be creative accounting to get farmers on drought assistance 25% of the time from 1 in 20 Federal scheme and 1 in 10 State scheme. They overlap too. More nitpicking on the interesting reader inputs follows.It took a long time to get admission that overstocking the paddock was part of the drought story. How long to acknowledge overstoking the planet? But Murdoch has come out and even Brisbane Courier Mail editorials acknowledge that a mature view of the current drought would accept global warming into the equation, at least in a risk mangement context. Next the Press will be saying sorry for their rearguard action trying to present a ‘balanced’ view on global warming. Only a year ago it was usually labelled ‘a theory some scientists believe.’
Back to drought. I think I once read it has the role in Australia of being the ultimate predator in terms of keeping some natural systems under some sort of control.?
There was a bit on the TV where a couple of farmers were complaining that unlike the old days reduced margins had left them without sufficient cash reserves to see this one out.
Reduced margins and higher turnover has been experienced in all industries and I dont see why farmers should be quarantined. Most farmers in our area have pretty well had it, small holdings, run down houses and busted machinery, this drought will shake the tree and bring on a new style of agri business.
rog: various industries have been bailed out of trouble over time, think about the car industry for a moment. Then there is mining and so on…
This scheme extension as describe by PM on midday ABC is not much more than the dole, We don’t want half the country landing in cities overnight rog. Also we don’t want the banks selling them all up at once do we?
It’s about people in the short term not properties.
Industries have been bailed out, but that doesnt mean it is the right thing to do, more a temporary expression of political clout.
Do panelbeaters or bakers or butchers get bailed out?
Most farmers wouldnt classify as a small business, more a subsistence industry.
This sentimental thing about “the bush” is a beat up by urbanites, nobody out west wears R M Williams, too expensive.
“Most farmers wouldnt classify as a small business, more a subsistence industry”
Willing to substantiate this rog?
rog: do us a favour and put a bit of yourself in your posts, you may even enjoy it from time to time. How about telling us what you do for a crust.
It’s also about communities despite your last comment “This sentimental thing about “the bush” is a beat up by urbanites”
Although I’m well and truly retired I have doorknocked many farmers and their families. The most distressing time for all of us was during the collapse of their leading processor. Although another local company obliged for a while they lost a valuable market share.
One young wife with high school children told me they only made enough to pay household bills even in good times but I knew the whole district needed each family operation producing to remain viable. Our other company knew that too.
Perhaps agriculture will have to pull back from the margins if we are in for a run of dry years. But the idea that farmers in more marginal areas should be encouraged to walk off and the taxpayer then somehow manage the abandoned farmland is a fairly silly idea.
In practice, this would mean the abandoned land would be dumped in the laps of the various state agencies which have responsibility for the management of crown land. Some piddling federal grants would be dished out for a few years to help those agencies form committees and conduct reviews of their newly aquired poisoned chalices. The feral goats would move in and much of the land would change to rolling dunes.
Some creative support for the establishment of new industries suited to marginal farmland, and assistance with consolidation of small properties into larger viable enterprises may be more productive.
There’s only one thing that can “save the bush”.
Thats to end the gerrymander. No, not that one, the other one.
We had the great kafuffle from the city about one vote one value. The city got its way. Equity prevailed, or did it?
There is still one great, perhaps even greater inequity. Thats the one vote, one third of a public servant inequity.
While ever the spending of the tax dollar is concentrated in the capital, on public servants, & the offices to house them, along with the concentration of public funded hospitals, education, culture industry, etc, the bush has no chance.
In this age of telecommuting, this is no longer necessary, & is definately inequitable. Besides, there’s all those empty bank buildings out there to house these people.
If governments had to spend the same percentage of their wage bill in each electorate, all the bush’s problems would be over. Nice fat pay checks for nice jobs, & a chance for kids to stay at home.
Public servants would never stand for the lack of services. Broad Band for all. The phones might even work. Just imagine, a hospital, where women could even have babies, wow.
I know, bush people would never bitch loud & long enough to have it happen, but its nice to dream for just a minute.
Seriously, there is now only one large employer left in this country, government. So if anyone realy wanted decentralisation to work, it would have to be government.
The facts cant be denied;
“The number of farming families in Australia decreased by 22% between 1986 and 2001.
Farms in Australia have traditionally been family businesses, passed on to successive generations.1 However, since the 1950s, the introduction of new technologies, the globalisation of commodity markets, and the removal of protective tariffs, have contributed to the restructuring of the agricultural industry.2 Due to efficiencies associated with economies of scale, for most commodities increasing farm size is linked to higher rates of return, making larger farms more economically viable than small farms.3 The amalgamation of properties as some farming families leave the industry has resulted in an increase in average farm sizes.3 The reduction in the number of farms and farming families has been one contributor to the population declines in the small towns that have traditionally serviced the farm sector.
For some farming families, farm income has reduced due to declining profit margins, and can be highly variable, requiring some farmers and family members to obtain off-farm employment to supplement and stabilise the family income.2 Stress, overwork and reduced time for family and community activities can affect the wellbeing of farmers and their families.4 The 1990s saw a renewed focus by policy makers and government service providers on the economic, social and personal circumstances of people living in rural Australia, and in particular those living on farms.”
http://tinyurl.com/y49ok6
from a reader:
“In the early 1990s there was a Qld parliamentary inquiry into drought “rorting” started off by whistleblower Dan Daly (author Wet as a Shag – Dry as a Bone), who used to work in the drought secretariat. Paying producers to overgraze – how could Qld be drought declared 25 percent of the time. And everyone believed drought rorting was rampant.
But if you do a simulation – declaring on 1 in 10 (percentile 10, decile 1) annual rainfall and revoking on median rainfall – you get a time series remarkably like the actual declarations and Qld declared 22 percent of the time.
But 1 in 10 is far too mild to declare drought on IMHO – but that’s what happens.
The Feds have a 1 in 20 – percentile 5 view – this is supposed to get you 3 declarations of EC per century. But no guarantees.
So the question is how long would Federal Treasury keep paying if climate fundamentally had changed and you had your “century’s worth” in a decade?
Dan – well he’s long retired. Got a public service medal – bloody would have deserved it after working in the Drought Secretariat.
But he did have the wrong end of the stick. And most people still do. No so much rorting as too lenient.
And after 14-15 years of self reliance “measures” producers aren’t much more self-reliant. And the bush seems to have been in drought since 1991.
And EC gets complicated – do you get paid for 1 drought year, a hail year, and a wet harvest in combination over 3 years ? These combinations also produce record low income streams.”
Jennifer: This had the potential to be the best thread in ages as it started with two distinct sets of observations, but where are the real farmers?
John Howard is no fool: In fact he is an astute politician with a finger on a wide range of issues. How did he get into staving off the ravages of drought for a few hapless families stuck in the bush with hundreds of millions of our dollars? He listens well to real farmers.
It’s my firm view stats other than how many people are compelled to vote, have no place in this discussion. Its farmers, families, communities and hidden emotion that rules his fate. Frustration with our grinding climate change is bound to boil over soon. What every politician needs today is a big bag of new policies. Keeping hope alive becomes the major job of all our governments.
If rog was a farmer he would be shrivelling too under this sun, but more importantly he would be with Howard in handing out a fair go to his mates in the bush.
This brings me to Luke who also insist in cluttering this blog with links, are we bums from the city or the fringe for it or against it as we trip along the dusty path to the next federal election?
We have plenty of time to yet get a variety of ideas before we see who holds the bag next time round. It’s no secret now I listen a lot to that most interesting character Bill Heffernan.
Jennifer,
For your reader fixated on his rain gauge and rorts and moving on from Dan Daly. Dan did once show not all farmers getting drought-assistance are exceptionally needy or equally vulnerable. One size does not fit all. Some recent work by ABARE has dug up some more contemporary and interesting angles on what makes some farms and regions more vulnerable. It is not just no rain, stupid. Quote ‘Australian farm households dependent on broadacre agriculture lack elements of the human, social, natural, physical and financial structural adjustment capital necessary to readily adapt to structural adjustment pressures. This is particularly true in areas of inland South Australia, New South Wales and Queensland that rely on the sheep industry for their livelihoods’. See Structural Adjustment article for interpretation at:
http://www.abareconomics.com/publications_html/ac/ac_05/ac05_march.pdf
Are small farmers and large scale industrial farmers equally affected by the drought?
What can we conclude about the role of farming methods in deepending the effects of drought v’s the need to farm as intensively as possible to increase yields to be competitive?
Boxer recommended “consolidation of small properties into larger viable enterprises”. Anyone know how the Tilbuster commons (if I got name right) is going?
My two brother in laws have recently left the land ( sick of the low pay and horrendous hours). They managed two of the largest sheep stations in the world. Whilst they operated in inland Australia in ‘desert’ area, they always managed the land as though it was under drought. They had the attitude that many farmers brought their problems on themsleves because of overstocking and poor land management. I have no doubt that that there are many very justifiably needy farmers out there….but as Rog suggests it it does not seem fair to continually have to be ‘bailing out’ farmers who are either not competent or who are on such marginal land that a reasonable living can not be averaged over time. Please note that the ‘not competent’ also incorporates those farmers who get greedy in the good times and do not plan for the bad.If we are in for more droughts over the next decades then some serious consideration surely needs to be given to what should happen to these farmers.
When the construction industry gets into trouble should we bail them out as well?
I am not saying we should not help those farmers who have a viable holding and have demonstrated that they are competent in both the management of the land and their finances. But farmers who have money tucked away from the good times or farmers who foolishly spend in the good times leaving ( too many tractors, harveters, 4 wheel drives, trucks etc etc) themselves nothing to fall back on, I do not think should be given a free handout.
That said though Gavin, if it is only the equivelant to the dole it certainly beats destroying communities in the short term and having a rush to the cities. It seems almost cruel to give handouts to farmers who do not have viable businesses. Given the lack of ‘trade skills’ and the salaries competent tradesman can generate I am sure there is hope for many of these farmers if they do leave the land (I am always shocked at the enormous variety of skills my brother in laws display everytime I have gone and spent a month or two with them). These brothers now work at mines earning 3 times as much money and no longer work 7 days a week every day of the year. The mining industry is very short of workers ( where they work and in W.A according to the media)’ are we distorting the market place and allowing for an inefficient allocation of resources if we continually ‘bail out’ the marginal farmer…or the greedy farmer?
What’s the Tilbuster commons? Sounds like minimum tillage gone wrong.
Bit hard to compare small farmers to large scale industrial farmers because they are both a very diverse group. Those cropping farmers who are buying up their neighbours can presumably survive better due to their greater economic capacity to get through the bad years. But the large area croppers and small area croppers are suffering from the same low rainfall and they all seem to be trying to maximise productivity. They’re not competing with each other, they are competing with heavily subsidised farmers in other countries. Or perhaps I missed your point.
Toby: you write a good yarn and I look forward to your posts. Perhaps we can go on swapping stories in an attempt to drought proof this country. It bothers me too that we are bailing out farmers however not every one can go west to the mines or north to the tropics. As I write I’m trying to think of one good reason but it’s too complex. It also bothers me that David or Roger think we can build a new industry somewhere else by sweeping up the dust here. Toby you are right it has a lot to do with machinery.
I once made it my business to find out what underpins a new primary industry.
Farmer’s families are particularly innovative and far more so than any group of scientists I have ever worked with. Most agricultural families these days also have a foot in heavy transport and mining. All this comes from self made men who from necessity are high risk takers. Behind every self made man though is a woman struggling to do the books and a bunch of kids driving tractors before their teens. The only thing that makes any of them cry is debt. Poverty is not the question but broken spirit certainly is and that’s why I said the PM’s hand out is all about hope.
My experience was mostly about mixed farming on small holdings in rich country with highly varied production. Naturally these areas were an attractive escape route for other struggling districts around the nation even over seas. Like in mining which I also did there was a rich variety of farming experience from other parts of the world. The major processors drove efficiency with great zeal because it was often the international market forces that shut down our industries one by one or together. Machinery always played a vital role and contractors in this field became my primary targets. Yes there were many of them. Never forget either, fuel is major component of all our Ag biz.
Those who know me will understand my enthusiasm for this latest handout as it includes dairy farmers and other similar producers. My rich islands are also affected. This means the whole country is on the brink and until we get an admission across the board that we are facing a big shift for all of us, limited remedial work round the edges of agriculture is a ……….waste of time. As the PM said we are only putting food on the table out in the bush.
It’s going to cost the cities plenty in the long run.
Boxer the Tilbuster Commons was some farmers willing to engage in common property resource mngt – theory being that common property (not to be confused with an open (free-for-all) resource) can be managed better than a private one in certain circumstances. They kept private land titles but arranged common, shared, mngt of land and water so they got economies of scale and put the land to more appropriate use eg less intensive farming on marginal areas, apparently freed up time and increased income (still the case?), and were able to regenerate land with conservation values (something they couldn’t do working solo).
In making a go of it, it seems the ‘certain circumstances’ are key for compatible mngt approaches and resource use. It took them a few years to close in on the arrangment.
Got ya some links:
“The ‘Tilbuster experiment’
Recent years have seen some rekindling of interest in group farming. The stimulus seems to have come from farmers’ participation in landcare and other ‘grassroots’ processes of environmental management. The ‘Tilbuster Commons’ initiative offers an instructive example. Its instigators recognised the potential advantages of grassroots processes in fostering cooperation in dealing with environmental externalities. However, their experience of existing processes of this kind operating locally was that they were piecemeal and small in scale and yielded poorly defined, unenforceable rules and thus unsatisfactory levels of compliance with the decisions made in those processes (Williamson, Brunckhorst et al. 2003). They sought to explore whether group farming could help surmount these weaknesses by running an ‘experiment’ in the Tilbuster Valley, some 15 kilometres (kms) north of Armidale in the New England Tablelands. Some external financial support for research activities related to the experiment was obtained from Land and Water Australia over the three financial years commencing July 2000.
The experiment involved combining four adjacent farms in the valley, with a combined area of 1,300 hectares (ha) that covered most of the valley’s area, into a ‘common property resource system’ (CPRS). Common property is shared private property (McKean 2000). The private owners of the farms shared in the management and proceeds of the land (while retaining their individual land titles), livestock, infrastructure and labour they contributed towards the CPRS. The pooled resources were managed by the entire group as a common enterprise. In January 2001, the CPRS was instituted formally as a private company. Although the company became responsible for a landscape of a scale that a landcare group might otherwise have taken local environmental responsibility for, its structure gave it scope to develop enforceable rules through which compliance by co-owners with agreed integrated solutions could be assured (ibid.).
This scope arose from the company providing a vehicle for integrating the environmental interests of the different farmers with their social and economic interests. Their agreed environmental interests could be translated formally into the constitution and working rules of the company. Compliance with the constitution and working rules could be enforced by imposing the corresponding agreed sanctions for non-compliance. ”
http://www.ruralfutures.une.edu.au/projects/3.php?nav=Environmental%20Impacts%20of%20Change&page=6
http://www.abc.net.au/rn/science/earth/stories/s1009097.htm
http://www.abc.net.au/rural/nsw/stories/s860296.htm
http://www.agrifood.info/review/2005/Marshall_et_al.html
also book “Reinventing the Common”
Thanks Pinxi. This sounds like an interesting option but presumably relies heavily upon a group of near neighbours having common interests and attitudes. I gather both the Tilbuster Common and the Furracabad farm cluster are no longer operating? Socially complex.
There’s more than one way to skin this cat. A common strategy in the WA wheatbelt, and probably elsewhere, is for farmers to lease their property to the neighbours. This increases the neighbour’s farming enterprise and lessor can either live on the property and work off-farm to supplement the lease income, or move away altogether for a life style change, educate the kids in the city etc. The other common option is the farming family growing their enterprise by buying out the neighbours and building relatively large operations that employ permanent staff. I get the impression that large non-farming companies scooping up large areas for corporate farming has dropped away and the big operators seem to be farming families. The people who recently were awarded the National Landcare Award have grown this way and their property now has, I believe, one million oil mallees on it that have been planted over the last decade or so. Either way, I don’t see the consolidation of properties and increasing the size of farming enterprises as a bad thing for the country, but the towns are shrinking.