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Dry....Drier....Driest

Julie West • Mar 10, 2016

2016 marks 20 years that West Currie Consultants have been attending Nhill.   During my first year working in Nhill a client told me that the water tap turned off when I hit town and today we are still praying for that tap to be turned back on.   Throughout these 20 years there have been many ups and downs within the primary production industry, from wool prices to fat lamb prices.   Unfortunately getting the right amount of rain flow at the right time seems to be the hardest variable to keep constant and is made harder because it is out of any one person's control.

It seems that every couple of years, we talk, read and watch releases about DROUGHT  -the consequences of a lack of rain on our industry, our towns, our communities and our mental health and wellbeing.

We google the weather maps daily to see when the rain might be coming and what the 12 month forecast is, to enable us to start planning for the pending growing season.   With the seasons usually starting well there is optimism in the air and then, out of the blue, we are dealt a curve ball .   There is either a week of blistering heat that shrivels the grain in the filling heads or an untimely downpour which may cease harvest or kick in the summer weed problem causing  an earlier than normal chemical bill - one that we really cannot afford.

Feeding stock and examining stock holding ratios start causing sleepless nights, we assess the fodder levels we have against what we need to get us through until the rain comes to give a green pick to the ewes and lambs.   Additional fodder expenses are again something that was not in the budget and something that we cannot afford.

It is really hard to continue to pick yourself up, dust off your trousers and forge forward - especially when no matter how efficiently and effectively you run your farming operation there is a reliance on moisture, which given the past 20 years is uncertain and inconsistent.

Banks have traditionally been happy and content to lend against the value of the farming property.   The farmer has been able to obtain additional operating funds to put in crops after bad seasons due to the value of the land being high enough to satisfy the financial institutions requirements.   However, as the length of dryness continues and we are on the back of two ordinary seasons - banks are sure to start questioning serviceability for the debt.

Serviceability of debt forces business owners to examine whether they are in a position to repay debt if another bad year transpires.   One must assess whether the cash flow and income generation will enable them to repay all debts as and when they fall due, or do they need to go to the bank again with a heavy heart and ask for some faith in their business history - as time goes by business history may become a thing of the past.

Recently the interest rate has been extremely kind, with it reducing or flat lining and is providing some breathing room and making it comfortable for businesses which carry any debt.   However, any increase in interest rates will have an untimely and significant impact on businesses which are just surviving and will be catastrophic to those that are relying on household support to meet day to day living costs.

Business owners need to look at their debt levels and ascertain whether, if interest rates were to increase to 8-10% would the business be able to sustain this increase.   Farmers need to look at their situations in three categories: worst case, average and above average scenario.

There are programs released by State and Federal Government on how to drought proof our properties with water storage facilities and fodder storage and there are programs and opportunities to reassess how to continue moving forward under these relenting conditions.   Please see our December newsletter or follow the link posted below for further information:

Crunch time has arrived.   Although the rain, or lack thereof, directly affects farmers and primary producers, it has an overall effect on our economy.  All our businesses rely heavily on the season the farmers are having, when money is tight for the farmers this passes down the line to luxury items, cafes, pubs, hairdressers, clothing stores and other business which are not needed for basic survival.

We all need to actively seek assistance and help from the many programs and drought packages which are available. 

It is not the time to be too proud to accept help.

You are not alone; your neighbour over the paddock or the small business in your town is in a similar situation to you.

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