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 has worked in industry and government. She is currently researching a novel technique for long-range weather forecasting funded by the B. Macfie Family Foundation.