Australia Leaders Are Likely to Boost Aid for Farmers

Australia Leaders
Are Likely to Boost
Aid for Farmers

By VERONICA BROOKS
DOW JONES NEWSWIRES
May 23, 2005

WEST WYALONG, Australia -- While Australian miners continue to ride a China-led resources boom, parts of another key export sector are fighting to stay in business. Chunks of Australia's farming districts remain in the vice-like grip of the nation's worst drought in a century that took hold three years ago.

Other regions are on the cusp of sliding back into the climatic scourge of the big dry, with rural producers anxiously waiting for crucial autumn rain to plant winter crops and grow pasture for livestock.

At a time when Australia's current-account deficit has ballooned to just above 7% of gross domestic product, the harmful affect of the drought on this commodity-exporting nation's economic performance has politicians in Canberra sitting up and taking notice once more.

Australia is a major global exporter of farm commodities such as wheat, barley, beef, sheepmeat, sugar, cotton and dairy products. In fiscal 2002-03, the drought slashed rural exports, lopped one percentage point off GDP growth and reduced agricultural employment by 100,000.

Farmers and the rural townships they underpin are one of the ruling Liberal-National coalition's key constituencies. Voters in the bush helped the conservative government defeat center-left Labor in the October election. The rural-based Nationals party, the junior partner in the nine-year-old coalition government, improved their representation in federal Parliament.

Prime Minister John Howard and Deputy Prime Minister John Anderson on Friday traveled inland to hear firsthand the plight of struggling farmers -- some of whom haven't received cropping income for four years -- and take advice on how the government can both extend and better target its A$1 billion-plus, or over US$755 million, drought-assistance package. Current arrangements include income assistance and freight, feed and interest-rate subsidies.

But some criticize the farm-aid plan as inequitable. Farmers can find themselves ineligible for aid when they or a family member take a job off the property to finance the purchase of essentials like groceries. Others complain the program rewards those who manage their farms poorly.

Mr. Howard has pledged to stand by what he regards as a precious part of Australia's social fabric.

"This country is wealthy enough to preserve its farmers," he told a group of 30 gathered in a parched paddock at Kikoira, near West Wyalong in New South Wales state's central west. "That doesn't mean to say that every farmer is going to survive. [But] if the farm sector disappears as a critical mass in this country, it will be changed forever and for the worse."

The government's response will be discussed at a meeting of cabinet ministers today, with expectations Canberra will offer more interest-rate relief, a relaxation of asset-test guidelines and more access to welfare.

Rural financial counselor Tony Paton lamented the byproducts of the drought, including mental-health problems and crumbling communities as young farmers leave the land and townsfolk to head to bigger regional cities.

Mr. Howard stressed that his focus is on the hardship experienced by the farming families, but the drought remains a spanner in an economic engine that is in its 15th consecutive year of expansion.

Official figures that measure the farmgate value of commodities point to agriculture contributing an average annual 3.2% to Australia's GDP during the six fiscal years ended June 30, 2004. However, research published in March indicates farming plays a greater role in the economy than official data show.

The Australian Farm Institute study found the farm-dependent economy accounted for an average 12.1% of GDP per annum in the six fiscal years ended mid-2004. The farm-dependent economy also accounts for more than 17% of national employment and more than 30% of employment in some areas of regional Australia, the study concluded.

Write to Veronica Brooks at
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