Tax breaks for insured farmers
Agriculture Minister Barnaby Joyce's long-awaited blueprint for the future of the industry is set to include major tax benefits for farmers who take out comprehensive crop insurance.
Leading rural financial services provider RSM Bird Cameron expects the incentives it recommended to form part of the White Paper on agriculture being finalised in Canberra.
One of the key recommendations is the introduction of a refundable tax offset scheme for all eligible expenditures on crop insurance.
RSM director John Thomson said the recommendations formed part of a "nudge policy" to get farmers interested in crop insurance.
"It is not designed to be another government handout," he said. "From a cash flow perspective it effectively halves the cost of premium.
"What we have modelled is that if we can take out losses for our most productive farmers, they will then engage in more productivity innovation."
There are now a handful of crop insurance companies operating in WA, but uptake has been slow among the farming community. Many farm consultants also remain unconvinced and regard it as just another cost.
Crop insurance is a feature of farming in major agricultural countries, such as the US and Canada, where it is backed by the government.
RSM Bird Cameron is involved in carrying out financial audits of WA farmers considering taking out revenue-based crop insurance with provider Laveto.
Other companies are offering indexed insurance based around productivity, rainfall and other benchmarks.
Mr Thomson, the CSIRO's Michael Robertson and the national agribusiness managers for NAB and ANZ were part of a task force on crop insurance convened by Grain Producers Australia.
The task force found the tax benefits would inject vital working capital back into agriculture after a catastrophic production event such as those experienced in parts of WA in recent years.
It also found insurance could remove the financial volatility associated with unpredictable weather patterns to create the stability and opportunities needed to increase productivity in Australian agriculture.
Mr Thomson said that despite a couple of good seasons for most grain farmers in WA, farm debt remained at a record high.
Mr Joyce had been expected to release the White Paper late last year but it is understood to have hit some hurdles with Cabinet's expenditure review committee.
