Today is the final day for members of the public to provide input into a Senate Committee review of a Bill calling for the development of an Australian Reconstruction and Development Board within the Reserve Bank of Australia.
The deadline for submissions is the close of business today.
A central theme of many of the 23 submissions received so far is that the difficulties producers are facing to survive this drought are a symptom of a deeper root cause: the long-term decline that has occurred in the profitability of farming and grazing operations.
The authors of numerous submissions talk of still receiving prices within the same basic range for a tonne of wheat or a deck of bullocks that they were receiving in the 1970s, but now having to stretch the same prices to pay production costs that had risen many, many times over.
Submissions describe farmers in their 60s and 70s now feeling ‘worn out and burnt out’ but unable to retire, because they cannot sell at a price they need to repay debt and fund their retirement.
Many submissions predict a looming mass exodus of farmers in the short to medium term, either through no financial choice, or by their own personal will while they still have some equity left to salvage.
Some point out that many caught up in the debt malaise include the “more progressive and innovative operators”, those who have made decisions to grow businesses, update machinery and make improvements to their properties, the kind of people without whom industries stagnate and do not progress.
One farmer wrote that the conventional advice is to put something away in the good years for the bad years. “In 35 years of farming, I have never had enough good years to put any away. All I was able to do was pay off the debt accumulated during the droughts.”
Another wrote: “The current drought is simply the final nail in the coffin, following years of poor returns exacerbated by the live cattle export ban imposed by the Federal Labor Government. While we all pray for rain to save our cattle, if returns do not improve, there will be no saving the northern cattle industry.”
A large number of submissions say the ARDB would help to stabilise the current situation and avert a looming wave of fire sales while more appropriate debt structures and better polices were formulated to enable farm gate returns to improve and long-term profitability to return.
One young farmer said he believed Senators considering the ARDB should ask themselves one question: “do we want farmers in Australia? If the answer is no, then come out publicly and tell us all. If it’s yes, get the ARDB up and running. This should be the first of many steps to get agriculture back to there it once was.”
Similar sentiments were expressed in another submission: “If you believe in “Aussie food for Aussie people by Aussie farmers, the ARDB bill is essential. If you are happy to import food from uncertain places, then do nothing.”
One cattleman said an ARDB would help to give Australian farmers a fighting chance to compete on an international playing field that was ‘anything but level’: “Whether it is tariffs, cheap labour, subsidies, exchange rates, illegal chemical practices in competitor countries, poor quality, truth in labeling, the story is the same. Australia loses. Industry in this country needs some policy changes that favour and support growth and sustainability. The ARDB gives Australians that chance.”
Of the 23 submissions lodged so far, the only submission that opposes the content of the bill is one submitted by WA agriculture minister Ken Baston.
In his submission Mr Baston said the WA Government made a decision in January 2011 that it would not provide a carry-on loan scheme as a lender of last resort to farmers based on three reasons:
- The Government would be required to assume risk that commercial lenders have rejected, with financiers referring risky clients so as to both limit their own exposure and avoid adverse publicity of debt recovery;
- Level of arrears and bad debt are often substantial and can be exacerbated if future seasons are also adverse; and
- Last-resort loan schemes are distortionary and encourage unviable activity, artificially holding up land prices and delaying orderly restructure and adjustment.
Mr Baston said the approach in the Bill was not consistent with the ‘risk management and preparedness approach’ of the intergovernmental agreement on national drought program reform signed by all state ag ministers in May 2013.
To read submissions or to upload a new submission on the Australian Parliament House website click here