GROWING STUFF, either animals, or plants in the ground, has always been risky.
But the risks are growing for Australian farmers, vis-a-vis their overseas competitors.
Weather is always a risk, but one which most farmers plan for.
Relatively few will take-up the cyclone rescue package, and for those worst hit, the amounts will be too little.
But in most other countries, full crop insurance is just a basic government provision, like a pension for old people. It guarantees that even in a catastrophic weather event, farmers have an income. As it turns out, often the event doesn’t have to be very serious and the income is very good.
In Europe, it is unmercilessly rorted. You can get 6,000 euros per hectare if the crop so fails you must plough it out. Most Australian farmers would take a few thousand dollars a hectare to farm after a disaster.
A similar but not quite rewarding scheme operates in the USA — and Japan, and China, and even India in some commodities.
When President Trump, who after three months still hasn’t got an Ag Secretary confirmed, threw-out about reducing crop insurance as a major saving in government expenditure; it took only hours to find-out that got US farmers really angry — and it appears that tweet has disappeared.
So, while Europe and the USA are slowly winding-back bits of their crop insurance, it is still a generous scheme given the cost is almost wholly paid by the government.
Farmers there pay a levy, which is like membership of a farming association, so they are pre-registered. That means when disaster hits, they just start getting payments before they apply (whether they want or deserve it or not). Then larger payments, after they apply — which can be long and complicated, often done by lawyers — and still much-rorted both sides of the Atlantic.
Similar rorting goes on in Japan, where crop insurance is just one of a suite of government assistance to prop-up farms down to a tenth the productivity of Australian agriculture.
In China, it is a way of pushing farmers into different commodities (assistance relates to growing the ‘right’ crop next year).
And in India, it is a total shemozzle of paperwork, and chits for free diesel and seed, that is part desperate social security (many people actually dying in major flood or drought) and part vote buying.
In Australia, we have a hard-arsed system which says farmers stand on their own feet. There are a few small immediate hand-outs from states ($900 from the Queensland government the week after flood or cyclone) and some bigger pay-outs for proven (lots of paperwork) damage in Category C (that’s Cyclone Debbie) or D (Yasi) events.
Maybe that’s how it should be — Australian farmers carry their own burden largely, so we remain more rugged, self-sufficient, tougher people and businesses than our overseas compatriots.
And the Federal government recognises this self-reliance with the Farm Deposit scheme, which allows farmers to salt away now for a rainy or dry disaster, with certain tax deferral advantages.
Perhaps that’s all that is needed.
And customers need to recognise even super cost-efficient farmers need to be allowed a price for their produce that has a margin to allow some real money to be made so some can by saved to have cash to fix paddocks and fences, replant crops or replace stock.