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Drought policy – why an urgent nationwide rethink is needed

by Charles Nason, 18 September 2018
17

OPINION

 

WE should thank Bryce Camm (QCL 9-8-18 ), Ben Rees, Geoff Edwards (QCL 30-8-18) and Peter Westmore (News Weekly) for initiating a much-needed and long overdue conversation and rethink about “drought”.

This did not appear to generate the discussion that we urgently require – Why?

Drought impacts on farmers but the wider community should be concerned.

Droughts impose extraordinary costs on farm operations generally tipping most operations well into the red.

Charles Nason

What droughts basically do is just expose the marginal returns in agriculture.

Yes, most farmers will hopefully recover but generally just about when the next drought impacts again and still in a much weakened financial position (the rural debt figures well demonstrate this).

Rainman (the climate decision support package) suggests a “drought” for southern Queensland occurs about every four to five years. It generally takes about this long to return into the black. What I see is a sawtooth profit graph but with a downwards long term trendline.

However droughts have a much wider impact.

As farmers restrict spending, local communities also suffer and this effect flows onto the wider economy.

However it is not that simple as livestock farmers also purchase feedstuffs for stock, but overall the local economy suffers. Former treasurer Peter Costello said the 2002 drought reduced the growth rate from 3.5% to 2.75% (“Beyond Drought“ (Botterill and Fisher 2003) also mentions this page 111).

There was a similar effect on employment. The 2002 drought only resulted in a 20 percent reduction in farm production, so an industry sector which only contributes about 2.5pc to GDP must have an enormous flow on or multiplier effect on the wider economy to affect the growth rate so dramatically.

As one local business owner said to me years ago “Roma needs a wheat crop” or as a local bank manager said: “I can never get over the wealth a busted arse farmer can generate for the national economy”.

This is backed up by Paul (L.P.) O’Mara who published a paper (from his PhD) in 1984 which suggested that agriculture had a much bigger effect on the economy than its contribution to GDP suggested.

Because of this flow on effect (or multiplier effect) the wider community needs to be concerned at least about the financial health of agriculture as it impacts significantly on the national economy. One comment about Paul O’Mara’s paper was that the 1982 drought may have precipitated the 1983 recession!

Governments do provide assistance to agriculture, but is it well targeted and does it contribute to resilience or are unfortunately “perverse consequences” too often the outcome?

There is an old saying about “give a man a fish and you feed him for a day but teach him how to fish and you feed him for a lifetime”. I would suggest that government assistance unfortunately largely falls into the first category and furthermore tends to reward reactive management whilst failing to promote proactive management. Hay drops, whilst well intended and outstanding credit to those who contribute and organise them, unfortunately only feed stock for a very short time. I would suggest that their resources and energy would be better directed towards encouraging policy which develops, encourages and rewards drought resilience for the benefit of all

Agforce has a drought policy but it is far too simplistic and provides little to build on. This is concerning as they developed the ClimEd package several years ago which had two components – one to understand climate better and the second was to use this to help develop individual producer resilience to “drought”.  Why have they not continued to build on this visionary initiative?

‘Beyond Drought’ was authored by Linda Courtenay Botterill and Melanie Fisher and published by the CSIRO in October 2003. Link to publication can be viewed here

Did “Beyond Drought” (p 164) echo this with the comment: ”The number of farmers who have attended prayer meetings for rain probably exceed the attendance at scientific workshops on El Nino”.

My concern is that we have spent billions on “climate change” and mostly on mitigation yet poorly addressed climate variability which would also contribute much to adaption to climate change as well.

Because droughts ultimately impact on the wider community, the community needs to be also an involved stakeholder.

They at least need to reflect on the inhibitory constraints that governments impose, hopefully by ignorance not by intent.

Bill Burrows and his co-workers firmly established the severe impact trees have on grass production. This is a dramatic impost on producers with a “green” block especially in a drought when it is amplified significantly.

Graziers are frequently accused of overstocking their country causing droughts.

However is there a corresponding obligation of the wider community to manage their wildlife and destock kangaroos in dry times? My experience suggests that they are about 50pc of stocking pressure in dry periods.

Surely the wider community needs to take this responsibility seriously as vegetation and wildlife together seriously impede producers’ ability to manage for droughts.

However at some out of the ordinary stage the wider community needs to become actively involved in drought resilience. Strategic feed stocks such as grain, molasses, hay and protein meals need to be considered. Cargill has stopped crushing cotton seed with a resultant acute domestic shortage of cotton seed meal (amongst other meals). Farmers supposedly require a social license to farm, should there be a corresponding strategic license or obligation to produce food and supply critical food stocks? A local feed supplier is looking at importing cottonseed meal from Africa. This should be concerning as we grow significant amounts of cotton in Australia, why do we have to import it?

Mark McGovern (QUT) with the customs house agreement questioned the myth of exporting 60-70pc of our food production and suggested it was much less on a net basis. This was done 20 years ago and our population has grown dramatically since. When we factor in recurring droughts, our food resilience or food self-sufficiency may not have such a comfortable margin as we are led to believe and droughts should be prioritised much higher. Julian Cribb in “The Coming Famine” questioned our lack of understanding of the strategic value of agriculture.

In 2007-8 we only produced enough wheat for our domestic requirements.

Rebecca Huntley’s 2017 book Still Lucky

One of the findings of Rebecca Huntly in “Still Lucky” (She spent 9 years listening to groups of ordinary Australians) was that Australians were concerned about our future ability to feed ourselves. Another finding was the reluctance of our politicians to make the important strategic decisions.

Drought is a complex issue and we could ask whether it is a symptom of a much deeper cause. If farming was more profitable would droughts impact so severely?

I thus suggest that droughts are now not feed or water droughts of the past but “profit” droughts where droughts just expose the underlying poor profitability of farming.

This drought will hopefully end but the Tax Office (and financial institutions) will get first call on any profits. This impacts on the ability of farmers to restore much needed equity and thus a buffer for the next drought. Should we consider exempting agriculture from paying taxes as India does?

If we factor in the multiplier effect this concept might even be revenue positive as well as attracting much needed domestic capital into agriculture.

All this is of no value to producers who have already endured many years of drought. What for them? Should we formalise the ad hoc household support using the concept of a universal income as suggested by several authorities as a model. The move by the EU (where agriculture is 40pc of the EU budget, suggesting that they value agriculture highly) from a production-based subsidy to an environmentally-based subsidy could also be a model also to consider to keep farmers on the land during low production periods and encourage environmental initiatives. Geoff Edwards of the Qld Royal Society has a paper on this subject.

An opinion piece by rural journalist and now UNE communications manager Mathew Cawood stated: “Farmers hate droughts because it hurts. Politicians hate droughts because hurting farmers make demands on their resources and loyalties. Economists hate drought because when politicians respond to hurting farmers they invariably get it wrong”.

We need to get this right sometime soon but Labor does not appear to have a good record of understanding regional economies. The “triple knock” of the live export ban, shire amalgamation and the vegetation act all adversely impacted on regional economies. A sustainable community needs a sustainable income base. Agriculture is usually the main economic driver of regional economies and anything which affects agriculture further reduces regional economies and thus population.

All this further reduces regional populations and inhibits decentralisation. Australia is already a highly urbanised country, we do not want it more centralised.

Is this just ignorance or just sheer bloody mindedness?

A RIRDC internal workshop on emerging issues in agriculture stated that there was no clear vision or objectives for agriculture or regional Australia.

Sher and Sher (1994) were astonished at the absence of a rural development policy in Australia and said the entire country was deeply dependant on Rural Australia.

They suggested that Australia should construct a rural development policy giving priority to six goals: (a) a growing rural population base; (b) rural people and communities reaping an equitable share of the rewards derived from rural resources; (c) a growing and diversifying rural economic base; (d) a growing rural employment base; (e) an improved quality of rural life; and (f) stronger, more cohesive rural communities. While they sound rather innocuous at first, acting upon these six goals would entail fundamental changes in rural policy and programs.

And “The day is fast approaching when Australia will confront the bitterly ironic dual reality of record profits/ export earnings from the primary sector and record numbers of traditional primary producers (and of the businesses dependent upon them) battling just to survive.”

“From a hard-nosed economic perspective, it makes sense to protect the rural goose that continues to lay so many of Australia’s golden eggs. But if the object of one’s protection and assistance is improperly understood, the help one provides may end up doing more harm than good. Agriculture remains a tremendous generator of jobs. It does so through a powerful employment multiplier-effect.”

I believe we need to reconsider dams and small on-farm feedlots as drought mitigating initiatives and remove the legislative barriers if we are really serious in managing droughts . The same water for the same stock but in a small drought feedlot requiring intensive water permits defies logic.

This drought will have dramatic effects on regional economies so we need an urgent bipartisan whole of government approach now to minimise the consequent flow on effect. Did the 1982 drought precipitate the 1983 recession? The significant shake out of farmers following the 1990-3 drought should not be repeated if only from a social perspective.

“Beyond Drought” was a whole new analysis of drought. Why have we not continued to build on it? They even suggest the notion of drought is meaningless where “extremes” are the norm. I have argued that we ignore floods at the other end of the climate spectrum and we really should be discussing a Climatic variability policy or extreme event policy rather than just the one extreme of drought. The 2010-11 floods may have caused just as much financial and social hardship as droughts.

Maybe the Canberra circus should stop the musical chairs charade and look outside the ring and take Rebecca Huntley’s comment seriously.

This drought will impact on the economy, what we do will determine its level of economic and social fallout and the perverse consequences of future droughts.

I would suggest that “Drought is the consequence of farmers’ (and governments’) failure to manage climate variability”.

Charles Nason

“Banoona”

Roma 4455

 



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Comment
  • Brad Bellinger September 17, 2018

    One of the best articles I have read on Beef Central. Last year we imported 17.64 billion dollars worth of food and beverages into this country. We import 70% of our
    processed pig meat, 80% of our seafood and increasing volumes of fruit and vegetables. The 3 major parties have deserted agriculture. Rural communities’ must desert them, if we are to survive.

  • George King September 17, 2018

    Fantastic article Beef Central. Brilliant

  • bill nicholas September 17, 2018

    you quote a lot of people, say a lot of things, but you don’t put it together and come up with a definite policy.

  • George Willows September 17, 2018

    Excellent piece Mr Nason.

  • Paul Franks September 17, 2018

    Our population is mostly urbanised these days and very well fed and have the sort of recreational opportunities that would rival royalty from fifty years ago.

    Agricultural production is the furthermost from their minds and in fact a growing proportion are openly hostile towards agricultural production.

    However, how much of the drought is exacerbated by the production techniques of graziers alone and our own industry. How much traditional semi arid sheep country now runs cattle, which are ill suited. In fact for the northern half of Australia has the price premium for Bos Taurus breeds (angus) and indeed MSA contributed to drought issues as producers move away from Bos Indicus to chase price premiums in niche markets. The Bos Taurus breeds being ill suited to the climate when it turns bad. How many producers hate grass in the good times as they overstock then cry poor in the bad times and expect government handouts to survive? How many pay too much for land, then overstock to pay it off and again cry poor in the bad times. I do not have to go far along my road to see property owners who quickly put their hand out for free government money, but also live the high life. I am sure most reading this (if it gets published) would know a few like that.

    Has the move to more feedlot production contributed to drought feed supply problems as feedlots now suck up greater amounts of grains and molasses. How much government policy has hindered drought mitigation or assistance. Have more dams been built to allow the growing of more sugarcane (and thus more molasses). I know where I am in Queensland the government appears to have a hidden anti-rural development policy. It is nearly forbidden to open up more land via land clearing to grow crops in northern Australia, and reading comments in an urban newspaper article, the general population is against rural development as well.

    Yes a lot of questions there, but the problem and solutions will not be simplistic and easy. In fact I doubt much will happen at all.

    Perhaps to fix these drought problems Australia has there needs to be a food shortage not for the production animals, but a food shortage for the general population. Having had it so good for so long makes people start to hate the practices that were used in the past (like land clearing) to get society to the position it now is.

  • Mike Introvigne September 17, 2018

    Great article. I disagree with Bill, you have provided numerous suggestions for policy consideration Charles, unfortunately our politicians just wont get it because they and their advisers are not logical thinkers and there lies the greater problem with this country.
    A system that promotes long term fodder conservation strategies would be a great start.

  • Michael VAIL September 18, 2018

    Thank you Charles. I agree wholeheartedly …

    I wonder if anyone, anywhere, really cares enough to pick up the nettle and grasp it tightly … where are our rural men of vision?

    This is the sad part … and drought tends to focus the mind … as you take the belt in another notch …

  • Michael VAIL September 18, 2018

    … and of course, our rural Womenfolk … Sorry

  • Tracey Walker September 18, 2018

    A great opinion piece, would be great to see this discussion taken a lot further. The only positive of this drought is the media coverage and the fact that with that coverage, it has shown the backing of Agriculture from the generosity of the public. BUT the publics generosity cannot be expected every drought and the publics expectations and respect for farmers will dissipate if we don’t forge ahead with better ways farmers and govts themselves can deal with future droughts.

  • Gary Richards September 18, 2018

    Simply one item is Gold and can fix our problem – WATER – we have to pipe water all over western queensland, imagine the crops and stock we can grow, this can fix the unemployment issue, make them work for the dole, stop overseas handouts, this can pay for the infrastructure, poly pipe is reasonable to use, we have to urgently think of this, to much water runs out to sea, by the year 2050 we have a major problem looming, a world shortage of food, we can be on the front line with this and export our crops. Ex grazier and a butcher for 35 years. 0416025694.

  • Hamish Webb September 18, 2018

    Great article Charles.

    Several times throughout I thought you couldn’t possibly put anything better than that… then I read the next paragraph.

    Let’s hope your comments fall on fertile ground.

    Also hoping you get some early summer rain… all the best.

  • Geoff Edwards September 18, 2018

    Thanks for these insights, Charles Nason. I agree that our federal representatives are not in the right head space to craft the once-in-a-generation review of agricultural policy that is necessary to set broadacre agriculture on a sustainable footing. They are too wedded to a market approach (as in the National Food Plan 2013). Sustainability cannot be achieved within a free market mindset: there are too many complicating factors.

    I suggest that rural spokespeople should take the initiative to collaborate with the scientific community and launch a round of consultations and investigations that would lead to a new model. Probably some seed funding from a philanthropist would be necessary as the non-government scientific community is perennially short of a quid.

    Food bowl of Asia? if the frosts in Western Australian set back the wheat crop there and El Nino kicks in on the east coast, then a fresh reckoning will be forced upon us.

  • Ian jenyns September 19, 2018

    I agree with all that you have said. Add my support to the comments that most of your readers have put forward. In addition, I would comment that the economic system under which we operate, has caused our farmers to be at the bottom of the (food) chain. This is not to suggest that we visit socialism. I believe that we need many brains, much smarter than mine, to devise controls on our capitalist system. Australians have never gone hungry and until they do, they will never comprehend the difficulties faced by primary producers.

  • Tom Brodie September 19, 2018

    Very good comments and suggestions Charles.
    Maybe we are all living above our needs and this is putting pressure on our country? Droughts will come and go and it will take good management and innovation for those to survive. Government handouts will never help in the long-term.

  • Russell Pearson September 20, 2018

    Yes lots of good comments and ideas.
    A key word that was only used once “Bipartisan”.
    Following an election, after the numbers are sorted, should not the elected members get on with the serious business of governing the country or their state for the benefit of the whole community.
    Surely there is time enough down the track for the political achievers to be recognised for their contribution to the economy and to society and the community and then be re-elected or discarded on their contribution to society.
    Just look what has happened in Queensland with the Tree Clearing Laws introduced after a phony consultation process with absolutely no intention of having any relevance to the already drafted legislation.
    Then to appoint a person as minister who has absolutely no idea about the industry, and by some of his comments had not even read the document. This stuff really divides the community and all the public drought support that is happening is not getting to the heart of the problem. Although it did please the Greens !
    Can you imagine the Premier calling the leader of the opposition and saying lets get together and see what we can work out ?
    We cant let Queensland Rural industry collapse !
    Not likely,.
    This has been going on for six years now !
    Apparently the Queensland Public Service Payroll cost about $30 billion !
    That is $30.000,000.000 ?
    Surely can’t be that much ?

  • Joanne Rea September 21, 2018

    Brilliant.
    It is particularly important that governments at all levels recognise and take responsibility for legislation they put in place which inhibits preparedness for drought. You covered a good many Charles Nason but the list is long.

  • Will Robinson September 22, 2018

    Charles, it seems that the livestock industry would do well to consult with Healthy Soils Australia’s technical board member – Prof. Walter Jehne. Walter has a remarkable overview on the soil mirobiology and its interaction with the climate – including the net heat retention from the sun which increases temperature and dryness. Walter’s solution is refreshingly simple so I sincerely suggest that he be consulted. Having traversed about 600 kms along the Warrego Highway, and then about 1000 kms to the south of it and, 1000 kms to the north of it – I believe that there is a problem – Walter has identified it and also provided a solution. Identification, quantification and a solution have been professionally executed – but debating seems to be more attractive than taking the medicine? Particularly if there can be financial reward for debating? A 30% reduction in grass productivity over the last 40 years remains an inadequate stimulus so far?

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