After weathering one of the worst crop yields on record, Australians on the land and in regional areas are looking to the Federal Government to make provisions for support as hotter, drier conditions are confirmed to be a continuing trend.
“The last couple of years have been tough on many fronts,” says Kylie Hull, Area Director for New South Wales and the Northern Territory. “The rainfall outlook for this season continues to be drier than normal so I don’t foresee any improvement in the near future.
“While there has been some key government investments recently there still is a feeling across the region that growth is either slow or going backwards due to the lack of rainfall.”
The impacts on rural communities are not limited to the country’s 88,000 farming businesses, Hull notes. “The drought has a domino effect: if the farmers are struggling this flows on into the town as they don’t buy new machinery or vehicles and so not as much money flows through the community.”
The effect on the agriculture sector’s 2.4% contribution to Australia’s gross domestic product (GDP) is reflected in this year’s reversal in economic growth, estimated at about minus 0.15% to date, and farming groups are calling for increased funding for assistance.
Australian farmers receive the second lowest producer support of any Organisation for Economic Cooperation and Development (OECD) nation, with only 1.7% of farm income derived from government payments, compared to 18.3% for European Union counties and approximately 50% in South Korea, Norway and Japan.
Tightening availability of insurance cover
The National Farmers Federation and Wool Producers Australia have both submitted lists of pre-Budget recommendations to the Australian Government ahead of Treasurer Josh Frydenberg’s announcement on 2 April.
Along with requests for an increased focus on improved access to international trade markets, concerns about biosecurity and the need for physical and communications infrastructure to keep pace with modern farming requirements, they both petition for tax incentives and financial assistance. Wool Producers Australia calls for a national drought policy and support for drought aid.
The deputy governor of the Reserve Bank of Australia, Guy Debelle, warns that extreme weather events due to climate change may affect access to insurance. Hull shares his concerns.
“As an industry we have not been able to develop a product that covers our farmers for drought and as such they have to rely on government subsidies,” she says.
“We have had a multi-peril crop insurance product for the last five years or so and that has been very hit and miss with the farmers. The need for this product is paramount but without the support of the insurers it has been almost impossible to see any consistency.”
We will help our clients navigate a tough market
Hull says that Gallagher is trying to ensure all our clients, both farmers and regional business owners, have the right information to enable them to make an informed decision about their insurance programs.
“We understand the market conditions at the moment and we work closely with our clients to tailor a package that suits both their financial and insurable needs,” she says.