WHILE the government is taking steps to enhance the Farm Management Deposits (FMD) Scheme, the private sector must also evaluate its contributions in the financial space, writes SENATOR BARRY O'SULLIVAN.
BEING a Senator for the bush often means you often spend more time on other people’s farms than your own.
The long road trips between meetings provide a lot of time to consider the separate parts that make up our rural industry.
Looking out the window during these long distance drives across the State, I’ve always enjoyed studying the farms I pass.
It’s interesting to consider the farming decisions of other landholders – what type of fencing they have laid out, the amount of feed in the ground or bales of hay stored in the shed, what types of yards sit constructed off the roadside and the livestock breeds standing in the paddocks.
Driving allows you to see where backgrounding country gives way to breeding country, where bitumen crosses into dirt road and the how land varies from flat Mulga and Iron Bark to Spinifex ridges and the Mitchell grass downs.
The mostly treeless, endlessly rolling Mitchell grass plains surrounding Winton, with its heavy, cracking, black clay soils, have always been a real highlight for me because it is where my family originates.
And while various occupations throughout my lifetime have kept me away from the region, sometimes for years at a time, I have always been drawn back to it like a spiritual home.
My family has deep bloodlines through the whole area – I married a girl from Barcaldine, whose family scattered north to Kynuna, where her uncle once owned the famed Blue Heeler Hotel.
My father was head stockman at Dagworth Station and he learnt his saddlery trade at Winton prior to the outbreak of the Second World War.
I feel at home in this country and I can appreciate its history and splendour, which has nourished my family for more than a century.
Each generation that has operated the farms along these roadways has confronted their own unique set of opportunities and troubles.
For our generation, there is a need to re-evaluate and reform the structures that underpin the sector amid a business environment where agriculture is one of many industries looking for attention.
On a macro-scale, there is a need for economy-wide reforms to build the innovation infrastructure required to make the Australian economy more agile.
The most obvious lesson from this drought is the critical need for farm businesses to build up cash reserves for use in low income years.
The Farm Management Deposits (FMD) Scheme has reached its highest level of deposits since the programme began in 1999, with over $4.6 billion held in accounts.
The federal government is further facilitating the ability for farmers to put even more money into the FMD scheme, with the recent White Paper introducing legislation that increases the deposit limit from $400,000 to $800,000.
We have also re-established an 'early access in drought' provision, allowing farmers affected by drought to withdraw their FMDs within 12 months of deposit without losing their taxation benefit.
These measures reward forward planning by farmers who acknowledge there will always be boom years and bust years.
It will provide more choices for farmers when the inevitable dry returns.
But while these are important steps by government, the private sector must also evaluate its contributions in the financial space.
I firmly believe the banks have an important role in re-evaluating the products offered to the agriculture sector.
After all, the business needs of primary producers are as varied as the flickering of a kaleidoscope.
Just as the laser levelled cotton fields on the Darling Downs have little in common with the Spinifex cattle country at Cloncurry, one shoe does not fit all when it comes to rural lending.
The impact of ‘cycles’ on the life of a farm (be it economic, weather or commodity) means different things to different enterprises.
Despite this, the financial loan ‘products’ offered simply ignore some of the unique aspects of agriculture.
Our rural industry will never truly be free from the shackles of debt until the loan arrangements on offer are made appropriate for the climate and country that shapes the individual farm business.
This does not mean the financial sector, nor government, should be subsidising businesses that are uncompetitive or we should be holding back the impacts of competition.
But the financial sector should commit to undertake difficult structural reforms that enable Australia’s rural industry to build on its competitive position.
The banks need to provide a more agile array of products to farmers which truly reflect the diverse range of businesses that exist on the modern rural landscape.
In response, Australian agriculture must identify where it can succeed in a global marketplace and take deliberate steps to secure this success and invest in innovation.
As I drive on the highways cutting through Queensland, I see out my window the hundreds of kilometres of boundary fence lines that connect the homes of rural families whose real contribution to our state over multiple generations cannot ever truly be measured.
But even with all the opportunities that present for agriculture in the coming decades, our ability to capitalise will depend on how we deliver more innovative and agile responses to our current troubles.