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Any new drought policy needs to secure the present and transition to the future

30 October 2008

Statement by NFF President David Crombie:

NFF notes the release today of the Productivity Commission Draft Report into drought support.

The Productivity Commission (PC) calls for a new policy framework that encompasses broader risk management challenges, not just drought. This is consistent with the NFF submission to the PC which called for a national policy framework for agriculture of which drought was only one part.

Having said that, on drought policy specifically, NFF asks the question: What is the new drought model the PC is suggesting? Is it to remove all support and only leave time limited income assistance and other investment such as R&D and training? NFF considers this is in no way sufficient to enable the most competitive (and the second least subsidised agricultural nation in the OECD) manage and prepare for drought and climate variability. The NFF recognises the need for change in the future and has made several recommendations for new programs that all farmers should be able to access.

The PC recommends 18 months transition to new policy framework, with 12 months crossover. NFF considers that this is insufficient to develop, implement and communicate a new policy model. Given the dire situation many families and communities are in, and the fact that the extent and duration of this current drought is unknown, and the reduced capacity in many farm businesses, families and communities given prolonged drought for many years, identifying a specific transition period is not prudent. Different families will face different situations and any new scheme must run parallel for a period. How a transition to a new scheme is set up and managed will underpin the ability to set up a new model successfully.

The PC recommends the phasing out of Interest Rate Subsidies. The NFF acknowledges that the IRS mechanism has problems, which is why we have proposed a new model in the future, however, it must be acknowledged that IRS have been and continue to be important for many farmers enabling them to survive the worst drought in history. Any phasing out can only be done once a suitable alternative is in place and an appropriate transition is in place.

The PC does not recommend HECS-style loans. The NFF considers that HECS-style loans could form one option to assist farmers with innovation, diversification and succession. They should be examined.

The PC recommends that the Farm Management Deposit scheme is maintained. NFF agrees that FMDs present an appropriate risk management tool for handling climate variability and other business risks.

The PC calls for enhanced Research, Development and Extension (RDE). NFF agrees and has called for significantly greater investment in R, D&E in our submission to the Productivity Commission.

NFF will examine in detail and respond in full to the PC report.

NFF looks forward to working with Minister Burke and the Government on a drought model for the future and again reiterate our support for the Government commitment that those families currently in EC will continue to get support through this very difficult drought period.

Media Enquiries: NFF – (02) 6273 3855 or 0408 448 250

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