Debt looms large for growers

Season 2011 could be a game-ender for many farmers, as the growing burden of debt threatens to envelope hundreds of farm businesses.

It’s just weeks away from seeding but some won’t have the money to plant crops. Even if this year is a good season, others will sow their final programs before walking away from the industry.

WAFarmers president Mike Norton said even though the disastrous 2010 season has finished, the State’s agricultural sector still faces enormous challenges.

He said the industry is yet to feel the full force of the debt crisis.

“I think it’s going to be tougher than it was last year to get finance,” he said.

“The banks are going to have to walk away from a few — what we don’t know is how many.

“It’s not even a matter of getting finance, it’s a matter of getting cash to clean up debts.”

It would be easy to paint the banking institutions as bad guys playing tough with debt-ridden farmers but Mr Norton said the reality was without the banks’ support, WA’s agriculture industry would be in dire straits.

“Obviously banks are going through budgets meticulously (but) the banks have assured us they’ll do as much as they can to get as many farmers through as they can,” he said.

“There’s a lot of nervous bankers out there and a lot of accounts they normally would have walked away from but they’re aware of what it would do to the industry.

“The last thing anyone wants is for a bunch of farms to come on the market in a forced sale… there would literally be hundreds of farms for sale.”

However, many of those who have been given finance will be cropping with strict conditions imposed by lenders.

Dry Seasons Committee chairman Dexter Davies said that in some cases banks were demanding the future sale of assets or land in return for finance. He said that was to be expected because even with a good year some farmers would have to sell up.

“There will be some (getting out) because the situation has been so bad, but they’ve been given an opportunity by the banks to consolidate and work it through,” Mr Davies said.

“That’s really the attitude I think the banks have taken — allowed people to consolidate, for them to come up with more options either in land sales or leases or different ways to get through.

“But it’s very difficult to see people get back all the way in one season from such a serious position.”

It’s not just growers feeling the pain of a string of poor seasons; Mr Davies said the committee had to consider the toll taken on rural businesses and communities.

“We’ll do a lot of work on drought policy reform and will be making recommendations to the Agriculture Minister (Terry Redman) and that goes through to the Federal Agriculture Minister (Joe Ludwig),” he said.

“What strategies would be best for those and the effect that it’s going to have generally in the communities, because a lot of this will have a big effect.”