Agriculture in Australia European settlement 200 years ago Settlers took up huge tracts of land free of charge. Wealthy individuals from Europe set up huge enterprises producing wool and meat for export. Later settlers took up land in more remote areas where rainfall was poor. Over the years, governments have encouraged individuals to develop agriculture all over the country.

Contents Support for development Banking in the rural sector Environmental issues

Encouraging development Land given free if it is developed Low interest loans to assist Soldier and civilian settlement schemes Taxation advantages

Government-sponsored irrigation schemes Snowy River Scheme, NSW Ord River Scheme, WA Various other smaller schemes

Other assistance schemes Government-assisted marketing schemes Drought assistance Crisis assistance

Problems in Australian agriculture Harsh, unreliable climates Fluctuating prices Dependence on international markets Declining prices and rising costs The original settlers in the most remote areas generally failed after one or two generations. The remote areas became huge cattle stations with minimal potential or capital investment. Up until the 1960s, agriculture was seen as a stable and growing industry. Since the 1960s, the relative position of agriculture in the economy has declined. It has declined mainly because of the dependence on international trade. Australia must compete with the exports of subsidised competitors. Costs have risen at faster rate than prices. Various strategies have been implemented to maintain the industry’s position.

Ongoing assistance Government advisory services Government-directed bank lending Management training Assistance in marketing world-wide

Strategies to assist Greater output per worker Replacing human workers with machinery bigger tractors bigger farms Better use of technology fertilizers breeding mechanical innovation 20,000 sheep per man 300+ dairy cows per farm

Wool price support scheme Attempted to maintain wool price Eventually became counter productive

Tree pull schemes Removing surplus orchards when over-supplied Often cause shortage and increased plantings later

Rationalisation of irrigation water Transferring water rights from farm to farm Better drainage of irrigation areas Laser levelling for more economical use Raising the price of irrigation water

Advice and training Government-sponsored advisers Government-assisted training schemes

Traditional areas of assistance by banks Property purchase Property development Stock and plant Working capital

Potential problems Fluctuating prices Unreliable seasons Natural disasters pests floods fires droughts Given the situation with the above, it has been necessary for banks to observe conservative lending policies to avoid making the farmer’s problem worse in the long term.

Erosion Wind erosion in heavily cropped areas Water erosion in heavily grazed areas

General rules that apply Debt servicing as a percentage of income: 20% Debt as a percentage of total assets: 30% Where the industry is more reliable or the product sold at a contract price, the lending margins can be raised slightly: Dairying - regular income Meat, poultry - contract prices If these rules are applied, the Bank has the capacity to carry the farmer through a few years of poor prices or seasons without risking a loss.

Salination Caused by excessive and poorly managed irrigation Water tables are rising and land is being lost

Water pollution Excessive use of fertilizers Chemicals gaining access to waterways Effluent from dairy farms, pig farms and feedlots

Animal welfare Stock management practices Transport Slaughter Export of live animals

Conservation of native flora Clearing and replanting of native bush and forests

Greenhouse emission targets Reduction in diesel usage transport cultivation Replanting of forests

Current situation Single operator farm Capital value $1,000,000 Annual gross income $100,000 One-worker farm Capital value $1,000,000 Annual gross income $100,000 Operating costs $50,000 50% Living costs $20,000 20% Farm improvement/investing $10,000 10% Debt servicing ($250,000 @ *%) $20,000 20% $100,000