Australian and international farm policy news

Drought bites harder

With 99.8% of New South Wales in drought or drought-affected and 57% of Queensland drought-declared as of July, worsening conditions across the country are having a profound impact on regional businesses and communities.
During the past 14 months, the Bureau of Meteorology has recorded below-average rainfall across NSW, central Queensland, the north-west of Victoria and into South Australia. Soil moisture levels are below average across much of Australia and rainfall deficiencies are set to persist in both the east and west.

Agribusiness leaders have warned the entire agricultural supply chain will now start to feel the grips of drought, with farms at the base of a complex value chain.

The NSW Government announced an additional $500 million Drought Emergency Relief Package on 30 July, including transport subsidies and waiving of Local Land Services rates and fixed water charges. A ministerial drought meeting in Canberra with the National Farmers’ Federation in mid-July discussed farm management deposit (FMD) offsets, subsidised loans, better long-range forecasting, research and development into new drought-tolerant production systems and building financial and mental resilience. New president of NSW Farmers, James Jackson, said earlier in the month that government’s reaction had been “underwhelming and late”.

Up to 15,000 farmers who are eligible for the Farm Household Allowance (FHA) have not yet applied. A review of the FHA will be held soon, noting calls for simplification of the application process. Farmers can now also receive an additional fourth year of FHA assistance.

Under mounting political and community pressure, many of the major banks are extending support measures and waiving penalty rates for affected customers, including NAB, the Commonwealth and ANZ.

Trade wars trigger US farm bailout

The US Government plans to spend $12 billion dollars to help farmers cope with huge retaliatory tariff increases from China over President Trump’s self-proclaimed ‘trade war’.

US National Farmers Union President Roger Johnson welcomed the aid but said a long-term fix was needed: “we cannot overstate the dire consequences that farmers and ranchers are facing in relation to lost export markets”.

The US government will provide direct financial assistance to affected farmers and buy up surplus agricultural products for use in low-income food assistance programs.

The National Farmers’ Federation said the US subsidies will hurt drought-stricken Australian farmers who are amongst the least subsidised in the world, making agricultural exports particularly vulnerable to the price impacts of increased government assistance in competitor nations.

President Trump has said he is ‘ready to go’ with further tariffs on more than $500 billion worth of Chinese goods.

AWI review shakes up the flock

The independent performance and governance review of Australian Wool Innovation (AWI) conducted by Ernst & Young (EY) has handed down 82 recommendations for change including: a 10-year board cap; a greater skills-based board; improvements in election and proxy transparency; greater strategic planning; stakeholder engagement, and independent investigations into breaches of code of conduct by current board members.

Key directors were found to have ‘questionable independence based on the number and materiality of registered interests and length of tenure’. The report noted that many directors are both wool levy payers and active players in the industry, creating an ‘inherent conflict of interest’. EY’s report found that several other RDCs have amended their corporate governance structures to introduce greater independence and ability to create a broader skills-based board.

AWI CEO Stuart McCullough said that the company and board have a lot of work to do to implement the changes and that the board has ‘accepted the recommendations and plan for adoption’.

Dairy giant backs mandatory code

Australia’s largest dairy processor Saputo has backed the Australian competition watchdog’s call for a mandatory code of conduct for the industry. Saputo said milk price step-downs (and claw backs) should be illegal, which could only be achieved via a mandatory code enforced by the Australian Competition and Consumer Commission (ACCC).

The ACCC’s interim report from its review of dairy industry pricing and trading practices recommended a mandatory code of conduct so farmers were not left exposed to disproportionate levels of risk if things go wrong.

‘It’s been easy for the industry to simply transfer the risk and the uncertainty through to the farm level,’ ACCC Deputy Chair Mick Keogh said.

NSW Dairy Connect President Graham Forbes said Saputo’s support for a code meant processors had little choice now but to follow suit, but United Dairy Farmers of Victoria, concerned about costs of a code being passed on to farmers, are holding back support until they have run a cost-benefit analysis.

Image: Tim J Keegan