Countless farmers trapped in a "double jeopardy" scenario will be forced from the land unless urgent institutional changes are made, a QUT economist says.
QUT Business School senior lecturer Dr Mark McGovern warned the ongoing crisis in the agricultural sector was "hitting farmers from two sides", threatening to wipe out families who have spent generations on the land, and many new starters too.
"We are faced with a double jeopardy situation that needs urgent attention," Dr McGovern said.
"Land which was overvalued at the time of purchase is being re-valued by banks and written down across the country, leading to security issues across the board.
"These accounting adjustments are the `quiet killer' for farm enterprises and the extreme weather events many have had to endure - like the ongoing drought and recent cyclone - are the `noisy killer'.
"This can take out anyone who has either a re-valuation that is unfavourable or who has suffered a series of bad seasons."
Dr McGovern said policy-makers had long been warned of the risks which now see parts of the agricultural sector drowning in $70 billion worth of debt, but had failed to act appropriately.
He is one of the brains behind the proposed Australian Reconstruction and Development Board, which would sit within the Reserve Bank and foster the reconstruction of faltering enterprises with an aim to "de-risk agriculture".
"The ARDB offers a sensible, prudent solution. It can foster or itself provide funding products which properly recognise the production and market realities faced," Dr McGovern said.
"It would foster or offer a better designed financial package. Why use products which assume a stable farm income when we all know that in agriculture income is neither regular nor certain?"
Dr McGovern said the industry was facing a critical moment and without necessary action the country would face a "tragedy" where agriculture was unsustainable for Australians.
"It is not so much a matter of being overrun by foreign investors, but being priced out of our own land," he said.
"Under the current conditions there is little reasonable prospect for a sensible person to move into farming. The young, especially, face high barriers to entry because of market failures which governments and financiers refuse to recognise. The ARDB could help rectify this.
"Through current policies Australia is starving itself of future talent and much needed returns. It is time to urgently turn things around."
Media contact:
Rob Kidd, QUT Media, 07 3138 1841, rj.kidd@qut.edu.au
After hours, Rose Trapnell, 0407 585 901
