For many Australian farmers, seasonal conditions are currently worse than the bad years of the Millennium drought, however despite the hardship the farm sector is generally coping with the challenges far better than a decade ago.In fact, agribusiness bankers feel most producers will probably emerge from the current big dry with a lot of valuable management learnings and more financially in tune with their business than when the last drought came to a halt 10 years ago.
Farmers of the current age are generally more proactive about managing their potential risks and seizing upcoming cash flow opportunities, and consulting closely with their bankers, partners and neighbours. Steve Hannan, Westpac’s national agribusiness general manager commented on this saying “Compared to the 2000s there’s been much more readiness for this drought period, and farmers have been more responsive as it has progressed.”
The fact that planning ahead pays is never more true than in the agricultural industry right now. Coming out of the Millennium drought and the 2009 financial crisis have cultivated a healthier agribusiness sector as people have learned from the hard times to manage their farms better. Hannan stated that “Clearly things are tough, and we need a lot of rain, but the way farmers are conducting themselves and working around the challenges is quite impressive.” However difficult things may be for farmers of Australia currently, their planning and work ethics to navigate around obstacles is remarkable and getting better.
While nothing would beat a drought and improve agriculture’s prospects better than rain, one of the next best options was having good business frameworks and the financial acumen to back up generations of intuitive decision making and farming skills. We are seeing this amongst a growing number of the agricultural community at the moment with a “heightened level of awareness of the impact of agriculture’s vagaries and the value in doing proactive modelling for potential market or seasonal situations” Brad James, Rabobank’s southern Queensland and northern NSW regional manager declared.
Brad James is also confident many of the drought-driven cost cutting and efficiency maximisation strategies farmers are adopting, will also continue to pay dividends well after the drought has broken. Viewing Australia’s current situation of drought in this light gives farmers a fresh perspective and some encouragement to push on through the tough times and come out stronger on the other end.