Wednesday, April 24, 2013

FARMERS ON THE MARCH OVER RURAL DEBT CRISIS

In the last year there have been a series of Rural meetings called to deal with the potentially calamitous Rural Debt Crisis starting with the meeting organised by the Richmond Mayor John Wharton as a consequence of the forced sale of his Queensland North Western property Runnymede at the middle of last year. This in turn led the convening of a Rural Debt Roundtable meeting by Bob Katter, Treasurer Wayne Swan, Federal Agricultural Minister Joe Ludwig and prominent Queensland pastoralists, in Brisbane in October last year. Reports on the Rural Debt Roundtable meeting can be read here.

The Rural Debt Roundtable Working Group (RDRWG), which arose out of the Brisbane Rural Debt Roundtable conference, was invited to and did make pre-Federal Budget 2013 submissions to the Federal Treasurer Wayne Swan and RDRWG convened Rural Debt meetings in Merredin Western Australia and at Colac in Victoria in April this year.

Reports on the Agricultural Crisis meeting attended by 950 farmers in Merredin WA on 15 April 2013 and the 12 resolutions passed at that meeting can be read here and a report on the Rural Debt Summit held in Colac a few days later can be read here.

More Rural Debt Roundtable meetings are planned for Southern New South Wales and Northern Queensland shortly.

The Rural Debt Blowout

Reserve Bank figures say that Australian farm debts have risen rapidly from $31 billion in 2003 to $66 billion (see article by Kate Dowler and AAP in the Weekly Times 17 April 2013 here).

A paper presented by economist and Queensland farmer Ben Rees to the Rural Debt Roundtable conference in Brisbane on 17 October 2012 showed the increasing gap between rural debt and net farm income that started occurring after deregulation of the economy in 1983 reaching a peak of 157.7% of farm production in 2010 which declined to 132% in 2011 (see Rural Debt and NVFP chart above).

Ben Rees says in that article that Australia’s Rural Debt ratio to output is Australia’s equivalent of the European Community “basket case” nations net to GDP ratios. However this statement appears to overlook the fact that the whole of Australia’s private debt to GDP ratios experienced a similar blowout during the same period and peaking with private debt being at about 165% of GDP in 2008 (which was however significantly less than the US’s private debt ratio peak of 303% in 2009.

Ben Rees article entitled Rural Australia Crisis 2012 can be read here.

Senior Lecturer of Economics at Queensland University of Technology Dr Mark McGovern’s address to the WA farmers meeting held at Merredin on 15 April 2013 can be read here.

Details About falling property prices in some cases of up to 50% has effected the Rural Debt owned to value ratios can be found here.

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