Sunday 24 March 2019

Farming Facts over Activists Fiction



I feel so badly for the Lemontree Feedlot family. This is nothing short of appalling. Imagine 120 people arriving on the doorstep of your business that you operate from your home where your family and employees families live, with the sole intent of defaming you and your business simply because they chose to lead a vegan lifestyle. (link below)


As it stands we can not prevent anyone from entering our farm and if they do, we can not prosecute them with any effective result. They are simply above the law as it currently stands. Farmers are being judged guilty by social media kangaroo courts while the real criminals are laughing at every form of law enforcement.
They are able to operate under the guise of Not For Profit organisations, with tax benefits that are effectively funding criminal activities.
So let’s look at a few basic truths about our Australian Feedlot Industry.....
1. Cattle spend an average of 95 days on feed in a feedlot
2. There are 400 accredited feedlots in Australia
3. The average feedlot capacity is 2,793 head.
4. 96% are Australian owned and over 95% are FAMILY owned.
5. The Australian feedlotters developed Australia’s first accreditation scheme for their members to adhere to in 1994.
Also remember as we in rural Australia struggle through a major drought, feedlots provide a drought mitigation strategy for beef producers.
They allow for cattle to be sold in a finished condition when there is no feed in the paddocks. They allow for stock numbers to be lightened off reducing impact on grazing land that is under pressure without rain. They allow for consumers to enjoy high quality beef year round despite the season. They give grain producers a market for grain that is not suitable for human consumption. They provide employment to rural communities and support local businesses.
While we personally have not yet been affected by activists, it is quite draining as you become suspicious of strange vehicles, dubious of people motives & questions, and simply must now investigate every unknown noise or light at night.
I am angry because we have always welcomed inquiries and visits but now we are far too distrustful of motives. I am angry that we need to explain to our young children that they need to tell us if they see strangers or drones around our family home. I am angry that social media is a platform for lies and fabrications about our farmers. I am angry that suspect footage and monetary motives can see our farming businesses defamed.
We aim to do everything we can for the cattle in our care. We pride ourselves on what we do and how well we do it.
Australian farmers need protection to be allowed to produce the best beef in the world. We need to be entrusted with the right to farm. We need your support, not in dollars but in voices to drown out the lunatic fringe who wish to impose their lifestyle choices on everyone.
If you ever have a question about food or fibre production please take the time to ask a farmer.


Monday 18 January 2016

The Label Conversation Forum Roma - A Summary

The Label Conversation
7 November 2015, Roma Explorer’s Inn Function Centre

The Label Conversation Snapshot

By Sherrill Stivano and Liz Todd




The opportunity to gather and talk about a single label for Australian primary produce was a concept well supported with over 60 people attending The Label Conversation in Roma on Saturday 7 November.

Sherrill Stivano is not just a farmer, wife and mum, but someone with vision and foresight for Australian agriculture.  The Label Conversation saw the culmination of 12 months of work for Sherrill and her project, for which she was awarded the 2015 RIRDC Rural Women’s Award for Queensland.  The event was made possible with support from Liz Todd, a dedicated committee, the Maranoa-Balonne Catchment Management Association and sponsorship from industry, government and businesses.  

Sherrill opened the conversation by challenging forum participants to think beyond Country of Origin Labelling and look to how Australian agricultural producers can gain tangible benefits from effective labelling of food and fibre produce.  Domestic and international consumers would ultimately benefit from a single label, backed by credible standards, which could be a unifying step for Australian agriculture. Sherrill stressed it must be a grass roots movement, with farmers contributing to the foundation of the label.




Participants hailed from across the country, and globe, to join in the conversation.  Representatives were present from industry bodies including Meat and Livestock Australia, AgForce, Growcom, Australian Lot Feeders Association, and The Council for Sustainable Egg Farming and pork industry; along with government departments, researchers, community groups, businesses, farmers, consumers, council and politicians.




Member for Warrego Ann Leahy congratulated Sherrill Stivano for her initiative on an important issue.  Ann emphasised that if Australia doesn’t provide good practices, someone else in the world will do it for us, taking away market access and farm gate profitability.  This initiative is an opportunity for the region to set goals and direction, and for the rest of the country to see the progress that would better define our food on a local, regional and national level.




The RIRDC project funds supported the attendance of Andrew Blenkiron who is Vice Chair of the Red Tractor Assured Food Standards in the United Kingdom.  Andrew is also a farmer, responsible for Euston Estate that generates 60,000 tonne of produce on an annual basis.  It was clear from Andrew’s first hand account that a single assurance and label system has delivered direct benefits to farmers through streamlined assurance standards and auditing, consumer confidence in products, marketing opportunities and a positive image.  This achievement has been the result of 20 years of hard work across the whole supply chain to restore the tarnished reputation of the industry stemmed from major health and safety concerns in the 1990s. 




Andrew’s advice to Australia if building a brand or label, is to start at the beginning and demonstrate significant tangible benefits to producers.  The UK was forced to start the other way by demonstrating producer standards to consumers.  He advised using the label as a one stop marketing tool, with the focus on one brand that is easily recognised on the supermarket shelf, as multiple and even competing industry branding is confusing to consumers.




Specialising in consumer perceptions of agriculture is researcher Dr Heather Bray, from the University of Adelaide, who brought to the conversation insight into the issues of ethics and price surrounding consumer choices.   Driving consumer’s choice is taste, price, nutrition, freshness and safety.  Heather shared that beliefs don’t necessarily equal behaviour.  There is lots of literature about our choices for moral or “better” choices, which is competing with other messages producers are getting about cheap and fast food.  Consumers are making moral choices quickly as the complexity of types of information being asked to consider at time of purchase is too much.  They need to think about what the cow was eating, antibiotics, how the food was grown…; when they just want a steak.  They go to the brands they trust because they can’t process all of the information.  A new label won’t raise awareness of food production, but it can encourage purchase of products with the label over others due to high levels of trust in Australian farmers.




Greg Mills, Managing Director of Food Integrity Solutions weighed in on the conversation about building trust in our modern food systems.  He explained that trust equates to a social licence to operate or privilege of operating with minimal formalised restrictions, such as legislation or market requirements.  Losing a social licence means increased licensing, penalties and regulation by governments and supermarkets, which costs money, as demonstrated in the United Kingdom.  Trust in farmers is high, but agriculture’s response to values and ethical production questions is based on science and economics.  Consumers are looking for producers that share their values and indicate that trust, but are not necessarily finding it.  It is not about changing agriculture, but how we are talking about it.




Meat and Livestock Australia (MLA) shared their journey in the red meat industry and development of the “True Aussie” brand.  MLA is producer owned and a not-for-profit organisation.  They provide services to the red meat industry by gaining market access, supporting trade and technical access, and business development and brand building.  Lisa Sharp, General Manager Central Marketing Industry Insights, said consumers are asking for more as they become more sophisticated and seeking food experiences.  Looking broadly at markets and consumers, there are megatrends around sustainability and ethics as well as health and wellness.  As a result, the True Aussie brand was developed on sustainability, fearless food and feel good food.  Understanding consumer attitudes and behaviour i.e. ‘consumer insight’ informs all strategy development and marketing programs at MLA with a “think global” approach, customised for local markets.  Consumers do seek peace of mind, they want confidence in the product they are buying, and are concerned about sustainability and wellbeing.




Dr Ian Plowman facilitated several discussion questions with panellists Dr Heather Bray (Adelaide University), Greg Mills (Food Integrity Solutions), Richard Norton (Meat and Livestock Australia), Lisa Sharp (Meat and Livestock Australia), Georgie Somerset (AgForce), Dougal Gordon (Australian Lot Feeders Association), Rachel Mackenzie (Growcom), and Richard Routley (Southern Region Department of Agriculture and Fisheries).




What are the labelling systems we currently have and what are the strengths and weaknesses?  

Some key points were that the horticulture industry is lacking in compliance and consistent labelling that provides benefits to those producers doing the right thing.  There are currently areas of high risk relating to food safety, however all farmers are enjoying the premise that Australian grown means clean and green.  The meat industries are well regulated, with various brands and quality assurance programs currently in place including Australian Pork Industry Quality Assurance Program, Aus-Meat and National Feedlot Accreditation Scheme.

Consumers take three seconds to make a decision.  They are confused with so many types of labelling systems and are overwhelmed.  They are cautious about product statements and claims, and sceptical about traceability through distribution facilities.  Consumers are let down, they want to make a choice about products they buy.  The systems are in place but consumers are not provided with the information or a label that underpins the understanding of the systems, so they go to farmers markets where there is no accountability.  Collectively the fresh produce sector is letting agriculture down, but it is also not accessing markets opportunities.




For some industries, “it is those not part of the brand that is bringing the brand down”.  Small producers are difficult to engage, non-conformers are tarnishing reputations and provoking activists, and each producer creating their own brand makes it hard to have a collective industry identity to market internationally.  

Gaining retailers support for consumer and producer benefits needs to be win, win, win.  Coles and Woolworths each have their own systems in place with tight controls over food safety and quality.  They need a point of difference and their branding is very valuable. There would be a better chance of adoption of a national label by new entrants.  With Costco and other global players coming to Australia, it would be an ideal situation to provide them with an ultimate peace of mind.   

What is the ultimate benefit to the consumer?  

When Australians buy beef or lamb, we know with certainty they are making decisions by 1. Price, 2. Nutrition, 3. Versatility and 4. Taste.  So if a label is about the integrity of the product it will not fundamentally drive demand.  We can ensure we have consumer and community support for agriculture, and a label might be one way to do that, but domestically price is the major driving force.  The same applies to eggs, for all of the media hype around caged egg, sales have fallen by .5% and may be increasing.  There has been anti-marketing regarding the product and branding, but consumers are still demanding caged eggs.  We often think what the market wants is what the loudest consumer wants.




What are the benefits and opportunities a single Australian agricultural products labelling system might offer? 

A single system would underpin the standards and traceability, enabling producers to get on with being the story tellers by talking about their products and marketing the experience. 

A single labelling system needs to offer increased profitability.  If a single brand/label offers market advantage, market access, and increased demand it will give that label a price advantage. Potentially if one system or label covered all of the existing assurance systems, it would improve adoption of practices at the farm level, it would reduce the cost of multiple audits and ensures compliance, which should result in a profit for the producer.

Outside of agriculture, all consumers see you as farmers.  A single label will bring agriculture together to present a single face.  Industries that don’t learn don’t last.  Industries are repeating the same research with the same people, which is a waste of time and money.  It might be time for agriculture to have a conversation internally, then engage the broader public.  Agriculture needs to talk to each other and be seen as a collective industry, not competing against each other.

What consumers say they want and what they put in their trolleys are different.  Having a social licence in the United Kingdom is providing an £80 benefit per livestock, with the continuing ability to farm under great pressure from the environmental sector.  Farming in the United Kingdom is under scrutiny, but the system has the capability to demonstrate confidence.  Programs are not Best Management Practice unless it delivers a bottom line to the farmer. 

Agriculture has left it up to others to tell our story.  Major brands have a whipping hand unless agriculture develops its own standards.  Australia has great attributes, but we don’t do great job of selling it compared to New Zealand who does a great job of selling itself and brand awareness. 

A national brand offers the opportunity address the standards and certifications so we get a chance to talk about the things we do, what we do, about the values and to tell the stories. 

How would this be driven forward by producers?  

Engage in a conversation not just about a label, but where we want agriculture to be in 20 years’ time, if it leads to a label that would be great.  Producers need to get involved in industry and organisations that have a voice at national level and find a path that has national influence.

In the United Kingdom, with quality assurance systems in place, moving forward is about the tangible benefits of being better together as an industry.  The industry is better with all working together and not about one sector against another.  The industry doesn’t do well if one part of the industry isn’t performing.  Experience shows it is easier to get discounters such as Aldi on board, as they leave quality assurance checks to contractors and don’t have their own systems.  Engaging consumers is putting pressure on retailers by demanding Red Tractor products.    

Georgie Somerset offered closing comments to the conversation started by Sherrill Stivano, that one should “never doubt that a small group of citizens can change the world”.  Georgie challenged participants to make a commitment of time, treasure or talent to continue the conversation and support those who are stepping up to challenge the norms and changing the face of agriculture.

Video Links for the Forum:

Presentation by Andrew Blenkiron Vice Chair of Red Tractor Assurance UK



Presentation by Dr Heather Bray Senior Research Associate The University of Adelaide


 Presentation by Greg Mills of Food Integrity Solutions


Question Time for Dr Heather Bray and Greg Mills



Presentation by Richard Norton, Managing Director of Meat & Livestock Australia and Lisa Sharp, General Manager of Central Marketing and Industry Insights


Panel 1 Addressing: What are the labelling systems we currently have and what are the strengths and weaknesses?  


Panel 2 Addressing:  What are the benefits and opportunities a single Australian agricultural products labelling system might offer? 


Panel 3 Addressing: How Might this conversation be driven forward by producers?


The wrap up


The event was sponsored by:



Member for Warrego Ann Leahy
Performance Feeds
Landmark Roma
QRAA and Tony Koch
Business Excellence Program
Roma Chamber of Commerce
Roma Explorers Inn
Greg Mills of Food Integrity Solutions
Dr Ian Plowman
Maranoa-Balonne Catchment Management Association
Bellevue Feedlot
Liz Todd

Photos supplied by Georgie Somerset, Sherrill Stivano & Liz Todd
Videography by Mick Russell of Linchpion Studios




Tuesday 21 July 2015

Tangible Benefits for Australian Farmers from Country of Origin Labelling


Country of Origin Labeling (CoOL) in Australia is long overdue. The link below gives more insight into the Government's proposed new CoOL scheme:

http://www.industry.gov.au/industry/IndustrySectors/FoodManufacturingIndustry/Pages/Country-of-Origin-Labelling.aspx


As a consumer I am tired of combing the back of packets to determine where the food is made, if it is an Australian product and whether the company is Australian owned. I simply want to be able to make an informed decision at the grocery store as to what food I put on my family's table, and this I imagine applies to most Australian families from across all income ranges, no matter their budgetary restraints. 

The new CoOL scheme offers much more information at a glance than currently exists. There is still however, more room for improvement, especially to name the country from where the imported food has originated, every time, not just when companies might like to comply. It is pleasing that foreign owned companies like Simplot who invest greatly in Australian vegetable growers will eligible to show a 100% Australian grown label. 

BUT what is the tangible benefit that will flow back to our Australian farmer? As the proposed CoOL scheme stands there will be no benefit to our farmers. The consumer will benefit, but is demand really going to drive up an increase in seasonally produced foods? Will the Australian wheat grower experience a marked rise in price for their product or the Australian livestock farmer find an increase in farm gate prices? Will the Australian fruit grower experience increased demand for their fruit? No. There will be no significant change.

With careful thought, industry consultation and proactive efforts, we can make a difference for our farmers. Effective and positive changes can be made in the following areas:

1. Tangible benefits for our Australian farmers through uniting under a single easily identifiable label.

These benefits would entail less regulation and interference from government, activists and consumers, ultimately decreasing red and green tape costs.

2. Greater consumer awareness of the standards and assurance programs under which our Australian farmers operate to produce some of the healthiest food (and fibre) in the worlds.

Our consumers trust Australian farmers, but need to grow a greater understanding of why. This should cross over from the domestic market place to our international consumers in export destinations.

3. Unifying Australian agriculture under a single label.

Many agricultural industries have tried individually to make a difference in this space. As a unified industry, the strength of our position would be magnified greatly. 

These changes can occur without reinventing the wheel, without huge costs to implement and most importantly, with great costs or imposition to our farmers. 

Are you interested to find out more?

November this year (2015) will see the Vice Chair (Andrew Blenkiron) of the Red Tractor Assured Food Scheme (UK) visit Australia. He will be key note speaker at a forum in Roma, Queensland, along with a tour of the Maranoa area and farms, before travelling to Canberra to attend additional engagements.

The link below gives more information about the Red Tractor UK:

http://www.redtractor.org.uk/

We can learn much from the Red Tractor experience. We can adapt and grow something that can operate in our Australian agricultural industries effectively. We can grow consumer awareness and understanding.

If you are wanting to make a proactive change that will deliver tangible benefits please get in touch.

This is our biggest opportunity to make an effective difference, but we need to get it right.










Sunday 5 July 2015

Test Driving The Path To Solutions

As I read through the Australian Government’s Agricultural Competitiveness White Paper I am pleased to see Australian agriculture finally receiving some long awaited attention. Having been relegated to the “too hard” or “not vital” basket for some time it is heartening to see the Government attempt to tackle the numerous problems unique to Australian Agriculture.

Do I believe this is the magic pill to address the great variety of issues facing all of our Australian agricultural industries? No. But it is a start and I hope it is a foundation on which we can build and improve the outlook for Australian farmers and the industries that support and depend on them.

Our politicians are trying to listen and while it is easy as farmers to identify all the problems that we face on a day to day basis, it is necessary to be able to provide thoughtful solutions. Think about one problem you face in your agricultural business or local community and how that problem could be alleviated or reduced given improved governance or policies. If we as farmers cannot find solutions to our problems, how can we expect people with little experience in agriculture and even less at operating a farming business, to come up with workable, effective and practical solutions?

We have the solutions within our agricultural ranks. We can make a difference. Stand up and be counted and make a difference. Inaction will see nothing change and the struggle to improve profitability at the farm gate will become increasing hard.

Do you have a solution to a problem (big or small)? Choose a champion for your solution, be it a State Farming Organisation, Industry Body, political party or local politician. Start conversations within your industry to see if the solution can be refined or improved. There will always be critics and those with a negative response, but study them further and ask what produced that response. They may simply be the wrong vehicle to carry your solution forward.

Ultimately any effective changes to agricultural policies must happen in a bipartisan manner and be implemented for the long term. Investment in agriculture is long term and it needs long term, consistent policies that reach across the political divide and changing governments.  Healthy and robust debate across the political spectrum can be (and should be) constructive and result in improved solutions, especially when combined with industry consultation and farm gate conversations.

Australian agriculture has many eyes focused on it and ears listening right now…….possibly more than ever before. Let’s get this right.


And remember if the vehicle you chose is not responding, it may be time to trade it in and try a different track.  The key though is to firstly give the chosen vehicle a chance.

Thursday 26 February 2015

Media Release - Country of Origin Labelling

MEDIA RELEASE                              27 February 2015

Australian farmers must lead with labelling

Australian farmers should be driving the country of origin labelling discussion for consumers, to ensure full household confidence in our food, according to Queensland’s 2015 Rural Women’s Award recipient, Sherrill Stivano.

Mrs Stivano, a feedlot owner from Roma, received this award this week for her project proposal to address food labelling based on her research of the Red Tractor model created in the United Kingdom – long before the recent Hep-A contamination in frozen imported berries.

“If we are investing our time and skills to identify our Australian food, we need to highlight the excellent production methods underpinning our agricultural industries,” she said.

“We must ensure consumers can easily identify Australian products, knowing they are produced with environmental stewardship and sustainability, excellent animal welfare practices and food safety through traceability and regulation as a daily priority undertaken by Australian farmers.”

Mrs Stivano said acknowledgement of production and quality accountability must return to the farmer, not the supermarkets or processors or RSPCA.

“These organisations have assurance programs which the farmer must seek accreditation through at a cost to enter the supply chain,” Mrs Stivano said.

“If we show our consumers why our food standards are so high through a specific label instead at production level, then this will drive the demand at the supermarket shelves.”

Mrs Stivano said while Australia’s agricultural industries have excellent assurance programs in place, some could be enhanced to include more specific concerns.

“This specific label must also complement those farmers who have taken the time to develop their own brands,” she said.

“The new label should be the first thing the consumer looks for, followed by the preferred individual brand.

“This is an opportunity to make a positive and proactive change, firstly for the farmer and then for the consumer, at both domestic and international levels.

“This should not be rushed through to be a vote winner or election catch cry. It must be a carefully considered and consultative approach with industry bodies, farmers and consumer groups,” Mrs Stivano said.

Proposed Country of Origin Labels – how it could work

Any Country of Origin Label must have these three key components at its core:

-          Environment
-          Animal welfare
-          Food safety

The CoOL must showcase the excellent environmental care and sustainability; animal welfare practices and food safety standards and regulations that already exist in our food production chain, more particularly on the farm before the commodities even leave the farm gate.

Costs and impositions must not be heavy.

Use existing framework already in place from industry assurance programs through to levies and Australian Made.

Mrs Stivano said this proposed labelling should be seen as an opportunity for farmers to showcase their existing production methods under one banner that the Australian consumer can easily identify

“It is imperative that under any country of origin labelling discussions, the focus must not solely be on the consumer at the end of the food chain, but at the start of the food chain, with our farmers,” she said.

Ends.

For more information contact:

Sherrill Stivano at “Bellevue Feedlot”, Roma Qld
0427 143 687 





On winning this year’s RIRDC Rural Women’s Award for Queensland…..

On winning this year’s RIRDC Rural Women’s Award for Queensland…..

I have to admit I was completely caught by surprise when I was announced the winner of this year’s Queensland award.

I cannot describe how very honoured I am to have been selected as the 2015 Rural Industries Research and Development Corporation (RIRDC ) Rural Women’s Award, Queensland winner.

I would like to thank you all for your congratulatory messages. They are hugely appreciated.

I would also like to extend my best wishes and support to the three inspiring finalists Kylie Stretton, Emily Rigby and Elaine Bradley. I look forward to seeing great things from you all.

I would also like to thank the RIRDC judging panel of Agforce Qld State Vice President Georgie Somerset, Westpac  Regional General Manager Queensland Agribusiness Peta Ward, RIRDC Chair Professor Daniela Stehlik and 2014 National RIRDC Rural Women’s Award winner Lauren Hewitt for their confidence in my project.

I would also like to thank Karyn Manktelow, Senior Project Officer, Plant Industries and Food, Department of Agriculture, Fisheries and Forestry for the support she gave all the finalists.

Thank you also to the sponsors Westpac, ABC Radio, Fairfax Agricultural Media, RM Williams Outback and Agforce Qld.

Finally a huge thank you to RIRDC for not only helping to provide rural women with the networks, support and confidence to achieve their goals for agriculture and their rural communities via this award process, but also for all the work RIRDC is undertaking to help improve outcomes for our agricultural industries.

I am looking forward to my journey which involves exploring the single labelling of our environmentally responsible, welfare based, sustainable and safe Australian food. Single labelling will give recognition to our farmers for their existing high standards of food production. It will also give consumers an easily identifiable logo in which they can place their trust when buying food.


#singlelabelling #rirdc #rwa2015 #farmersfirst


With Minister for Communities, Women and Youth Monoster for Multicultural Affairs Shannon Fentiman


With Finalists Kylie Stretton, Emily Rigby and Elaine Bradley, RIRDC Chair Professor Daniela Stehlik, RIRDC Director Keith Steele and ABC Landline Presenter Pip Courtney


Tuesday 16 December 2014

Australia's "Rural Debt Crisis" Some Realities

There has been so much commentary from many different people and angles on the current “rural debt crisis” and voices are growing louder and louder……..but are they the right voices or do they deliver the right messages? And where are the solutions?

Rural debt is a complicated animal. To plan for the coming twelve months we have completed as many as 4 cash flow budgets, all based upon weather assumptions (wide spread rain, no rain, successful crop, no crop) as all these factors affect our business and all in varying degrees (and no I have not doubled up, each has a separate impact on our business).

By this example I am trying to show that every rural debt owed by a farmer is an individual one, as different as the farming operations responsible for service the debts. Many factors will affect different farm businesses, like the following examples:

1. The Interest Only demon – when people speak of servicing a rural debt, they could be speaking of meeting their interest repayments rather than actually repaying principle on the debt (remember this is not in all cases though). As overdraft limits are exceeded through servicing the interest on the interest only debts (generally Commercial Bill Facilities or Fixed Rate Interest Only or Term Loans), a new higher limit is put in place, using up equity in the mortgaged assets. There is a very high portion of rural debt which would be of the interest only persuasion, and this has not accumulated in the last two years, but over many years and can present a huge problem when it comes to succession planning.


2. Loss of equity – The market value for rural properties over the past decade had been steadily increasing in most areas, yet absurdly the earning ability of the rural properties in most case was not rising at all. So for little or no output farmers were handed an equity windfall that some chose to borrow against. In recent times much of the value of these rises has been trimmed off the value of rural properties leaving debts that exceed the bank value of the property, effectively reducing the security categorisation to partially secured and some institutions have seen the need to call in the loans. 


3. Lack of understanding of terms of the lending documents – While we all understand that if we borrow money, we must repay the money plus interest, the conditions attached to mortgage documents, loan contracts and the like are extensive and difficult to understand. Legal protection is offered for those acting as Guarantors as they must seek independent legal advice with most lenders to have the documents fully explained. Perhaps seeking independent legal advice (despite the additional cost) is something more people should do, especially when you consider the amount of money involved with many rural debts. 


4. Not enough equity to begin with – Entry into a rural industry is very hard, and can mostly be attributed to the high cost of land. Rural land prices have presented a huge barrier to new entrants to the industry, especially because the value of the land is often not reflected in the earning capacity of the land or the return on Investment. As a result some are highly geared to begin with, allowing little margin for a downturn in their income stream when confronted by poor seasons, a raging drought and/or falling commodity prices. This can also apply to those children of retiring farmers who inherit a large debt along with a farm.


5. A Bad Bank Manager – perhaps he (or she) is the manager who strives to achieve their end of year bonus through growing their lending portfolio and as a result does not investigate the repayment or serviceability capacity of the farm business properly while encouraging the uptake of loans. Perhaps they are simply not skilled enough in being able to manage clients and understand the individual needs or business capabilities. Either way a bad bank manager can be the ruin of any business (not just rural ones), and they can also have long term effects as a farm tries to trade its way out of a poor position (before you add in a drought or poor seasons and commodity prices), even if the next bank manager is one of the best.


6. The personality of the borrower – We of course have our risk takers and our ultra conservative farmers, some who take a gamble on a business decision for their farm which may not pay off. Surprisingly enough though the ultra conservative farmer can also find himself in difficulty when tough times strike, as he did not undertake something he considered too risky but which could have put him in a better position. 


7. Previous Banking Practices – during the 80’s and into the 90’s banking practices were very different to what we have today, but for many of our aging farmers that is when the debts were originally taken out and they are still service a debt that would not have been encouraged in today’s financial industry, and which has resulted in making the tough times tougher.


8. Taxation – now this is a contentious issue……..tax breaks for farmers. So I do hope I do a little justice to my explanation as I see it. During the good seasons and when commodity prices are strong, may a farmer has been encouraged to invest in unscheduled repairs and maintenance, purchase new machinery and other various methods to reduce the amount of tax they pay (which can be a lot). There is also a Farm Management Deposit Scheme which allows some money to be locked away in a fixed deposit for a minimum of 12 months and a maximum of 5 years (also the total amount is capped), effectively moving that amount of income out of the taxable year and allowing the farmer to draw on the funds in a time when income will be reduced (usually due to poor seasons). Rarely are farmers encouraged to repay debt as it is not a “tax effective” strategy. There are few other industries that have set historical costs like farming with a volatile income stream that depends on so many factors outside of the farmers control like the weather (drought, flood, no rain when needed for crops or rain when trying to harvest), commodity prices, the value of the Australian dollar, and government policy. A crystal ball can only see so far and the Live Export Ban was an example of a totally unforseen event that is still having ramifications for some. The worst outcome is that all the outside factors present at the one time. If we wan our farmers to fund themselves during extended droughts we need to provide the incentive through tax breaks in good times. If they are encouraged to pay down their debts in good times they will support themselves during the bad.


These are just a few examples of issues that can determine in part the fortunes of rural borrowers.


I do believe there are some serious issues raising their heads now that can be addressed to make small improvements for struggling farmers, especially those facing the prospect of foreclosure. I wish I had solutions to the larger issues for the here and now, but I can only offer some small suggestions that would be of assistance in the future.

Changes to the FMD (Farm Management Deposit) scheme

When funds are placed into an FMD, they attract a reasonable deposit interest rate, but difference between the interest being accrued on lending facilities and that earnt on an FMD is much greater, easily up to 5% or more. I suggest that the FMD scheme be expanded to include an offset arrangement against a nominated lending facility. And no this does not already exist as suggested to me in the past by a politician. There are no offset arrangements that can be utilised as a taxation minimisation strategy during good times to allow for the retention of funds for the tough times.

Review of rural lending practices of the Banks

Once when I worked in a bank as an Agribusiness Analyst and there was a tough drought underway, that bank quietly decreed that there were to be no foreclosures and that managers were to do their best to facilitate the refinance of clients and to help others weather the drought providing ongoing support in the increase of overdraft limits (to avoid default interest rates). It was a win for both the bank and the borrower as there were no foreclosures and no farms being sold bereft of grass and water, for below market value. I am glad to hear that this policy still remains in place today. This is where I do struggle to understand the current round of foreclosures. Surely the properties are being sold during this widespread drought for below market value and therefore is there not a good chance that the debts owed would not be covered by the sale proceeds? I cannot understand how it could be considered good lending practice and I suggest that the government does need to create a policy for the banks around Natural Disasters (both drought, floods and cyclones) whereby there are no foreclosures unless they had already been underway.

I would also suggest that the banks undertake to employ a specialist team of managers who can take over and manage the whole default process in a way which allows the farmer to process the series of emotions, the first of which is denial, usually followed swiftly by anger and this is generally when communications between the bank and the customer break down. In fact I suggest that one of the team be a counsellor who will be able to understand the farmer’s emotional needs and ensure that any transition to a foreclosure is managed in a way that leaves the farmer’s integrity and dignity intact and also allows them to deal with the grief associated with the loss of their home. Remember that your average bank manager lives amongst the community, has friends in that community and is a part of the community. They are not are not specifically trained to handle the emotional impact of foreclosure. They may only ever experience one or two first hand in their career. The simpler option for many managers is to cease verbal communications or hand them over to another department (a very impersonal one who has no job but to see to the removal of the mortgagee). The communication channel then becomes a series of default and legal notices. There is a more effective way to handle such a sensitive issue than with a police escort and bullish tactics through ensuring bank staff are sufficiently skilled or supported to manage the difficult situation.

Any review should also touch on the disparity in interest rates between farms and businesses and the standard home owner. While the financial market place responds quickly to interest rate falls for personal borrowings, the response is much slower to business lending generally. However should the rates rise, the increase is generally passed on almost immediately to the farms and businesses. There are more risks associated with business lending, although I would love to see a study completed to prove this claim. Additionally there are numerous unnecessary fees that once never existed (I joined the bank a year before account fees were introduced, the following year was hell). As our banks are not struggling I would love to see them offer some waivers in certain fees to any businesses impacted heavily by Natural Disasters, not only farmers during times of drought.

Education

I saw today a comment which was so very true and correct, and I will now paraphrase it: 

Farmers have invested heavily in educating themselves about farming practices and how to do things better and more efficiently, grow better livestock, etc. but their financial education has not seen the same investment.


I do think this is a vital and neglected area that could be easily addressed perhaps in conjunction with the Rural Financial Counselling Services but in a proactive manner rather than a reactive manner.

Remember……………

It is important for us to remember that our banking system and our major banks are very sound having survived the Global Financial Crisis reasonably unscathed. Any steps taken cannot undermine the strength of our financial institutions, or foreclosure will become the norm (like parts of the US) rather than occurring occasionally.

A farm is a business and there are many other non-farming businesses out there who struggle through the down turn in an economy, seasonal impacts and other effects, however a farm can experience so many outside forces at once, for such extended periods, leaving little to no income. There are few businesses that can compare in this respect, let alone continue to operate as many farms do.

Diversification is a wonderful idea and practical in some areas, but for many other areas it is simply not a solution.

A farm is a business and must be treated as one financially, otherwise sustainability and longevity is simply not achievable.

The best thing about the current debates, articles and coverage relating to rural debt are the conversations that are occurring. Let’s make sure they are constructive and lead to the development of workable solutions at all levels. We may not be able to make a difference for many currently affected, but let’s make sure that there is not a repeat in the future and let's do this through mature debate and discussion. We don't have to like each other to develop solutions and ideas together.

At the end of the day it is there is a much more insidious problem facing our farmers than the “rural debt crisis”………….declining profits and erosion of farm gate profits. The decline in profits for many has lead to a decline in their debt servicing capability. Without correctly addressing this issue we cannot address our rural debt and that is a whole other story.