Interact
Member access
Browse
SuperInvestor TV
Share
» Articles - Outllook for country areas
What is happening in the country with the drought and the new Government?
So much of life in the country revolves around the weather. Farmers across Victoria are crossing their fingers in the hope of life-saving spring rains, after another dry first half of the year.
Victorian Farmers Federation president Simon Ramsay says so much hangs on a good season. “From a rural point of view, the climatic environment is the most important thing and whether we’re going to get sufficient spring rain to recharge some of our depleted reservoirs,” he says. “Water is the biggest issue (in the country) – it’s about what the spring might hold in relation to water catchment and for those living on river systems it’s the allocation of water for irrigation and also for critical human needs.”
Farmers and business people in regional Victoria are struggling to deal with one of the worst droughts in living memory. Add this to a tough global economic climate for exporting businesses and the new Federal Government and the result is an atmosphere of uncertainty and anxiety in regional areas, according to Mr Ramsay. “The health of the economy is probably a big issue for us, given we are a large exporter and the Aussie dollar is near parity with the US dollar. That will impact on our export earnings,” he says. “With inflation, fuel prices, fodder prices and fertiliser prices all going up, the input cost side of the farming business is under pressure. “We don’t quite know the true Kevin Rudd, I don’t think. “We’ve seen some election promises offered and honoured but it’s probably too early to make a call on how the Federal Government will perform.”
Plus there’s the uncertainty of what price agriculture will pay when it eventually enters the Federal Government’s carbon emissions trading scheme. “Agriculture is trying to work out at what cost that will come at if we are to enter the scheme in 2015,” Mr Ramsay says. “Agriculture shouldn’t be included at any stage until we can properly measure our emissions. “The livestock industry is one of the large emitters and we’re still unable to measure emissions from livestock.”
But farmers are known for their optimism and Mr Ramsay points to strong land values and productivity gains as positives for primary industries. “Land values are holding pretty well in country Victoria,” he says. “There is strong competition from corporates, superannuation funds and those larger family farms wanting to expand. “It’s a sign people see there is a future for rural land use, whether it be for trees, dairy, livestock, grain or horticulture.”
Mr Ramsey also highlights the strength of commodity prices, particularly milk and grain, as reason for optimism, despite the high cost of inputs taking some of the value off possible revenue. “Productivity gains in agriculture are at around 3 or 4 per cent and the return on investment is at 6 or 7 per cent now,” Mr Ramsay says. “So if you compare that to superannuation funds, I’d say agriculture might be a good investment.”
Eliza Adamthwaite
www.SuperInvestor.com.au
Now that you have read this, what do you think? Do you have other ideas? Please share you views with other members (eg by blog or discussion form) and/or request professional member(s) to contact you directly.
