Rural Independent candidate and MLC Philip Gardiner has warned of an impending insurance crisis for West Australian farmers.
“In 2010, 45 per cent of farms across our State were regarded as vulnerable. This year, one third of farmers in the State — and this is a conservative estimate — won’t be able to have crops in their fi elds, or will have serious input constraints,” Mr Gardiner said.
This is because they will not be able to access fi nances to cover expenditure, due to having taken loans over several poor seasons.
“The banks’ lending guidelines prohibit them lending to farms if their budget does not show a profit, or if equity dips below a certain guideline,” Mr Gardiner said.
Westpac agribusiness manager Chris Moore estimated that 70 per cent of WA growers would require crop mitigation insurance to continue to be viable for banks.
“We’ve got about three weeks to get a contract going between participating banks and Swiss Reinsurers for crop mitigation,” Mr Gardiner said.
“You can’t take out crop insurance any closer to the start of the season. It’s beyond a crisis — it’s catastrophic.”
Mr Gardiner’s fears are echoed in a study released on Monday.
The decade-long study, released at the Agribusiness Crop Update 2013 by Department of Agriculture and Food chief economist Ross Kingwell, has 13 per cent of broadacre farmers on the brink of fi nancial collapse.
Encouragingly, the study found that farms in the northern grain belt were still “doing fi ne”, along with parts of the Esperance region.
Local machinery dealers remain cautiously optimistic, despite a disappointing harvest of 1.55 million tonne in CBH Geraldton zone, a 60 per cent drop from 2011’s total of 3.5 million tonne.
Preparations for that 2012 harvest gave some dealers a record year, and the lower tonnage was partly balanced by higher grain prices.
Elders Real Estate Geraldton rural sales representative Robert Taylor shared the machinery dealers’ overall view of conditions in the Mid West.
“A few extra farms are on the market this year, but that doesn’t reflect anything other than normal market conditions,” Mr Taylor said.
“There’s definitely added pressure so far as financing a crop goes, as input costs are increasing all the time, which makes it harder for farmers, but we’ve been fortunate in that our land prices are stable and strong.”