Seasonal conditions test current drought policy

[as published in the Stock Journal]

Drought policy has a history of constant change. Mid last century, the focus was on attempting to ‘drought proof’ agriculture by expanding irrigation. In 1971, it became recognised as natural disaster, only to be removed from the joint Commonwealth-state Natural Disaster Relief and Recovery Arrangements in 1989. The 1992 National Drought Policy was the next iteration, which established a range of common government objectives and assistance programs. In 2013, the Intergovernmental Agreement on National Drought Program Reform (IGA) was put in place, which essentially shifted the approach by governments from response to preparedness and resilience. In 2018, the IGA was replaced with a new National Drought Agreement, which was renewed this year.

One thing that has not changed through this evolution is that businesses cannot become more prepared for and resilient to significant external shocks if their productivity is not increasing at a rate that enables them to cope with severe weather events out of their control such as drought.

A July 2024 ABARES report into farm productivity decline highlights that throughout the 1980s and 1990s, broadacre farm productivity grew at an annual rate of 2.18%, spurred on by significant policy reform, farm consolidation, the establishment of the RDCs, and new machinery and technology. However, from 2000 to 2023, broadacre farm productivity has slowed to an annual growth rate of 0.72% and has become increasingly volatile. Notably for our industry, livestock businesses are below the average annual productivity growth rate.

Further, Australian agricultural productivity has slowed relative to the world average. This matters because as a trading nation, it means we are becoming less competitive in the global marketplace.

Farm productivity slowdown is linked to farm resilience; that is, it reduces the ability of the business to prepare and plan for, absorb, and recover from adverse weather events. It also has implications for natural resource management and emissions reduction, which have become an increasing focus for governments. Compounding all of this is the inextricable connection between agricultural performance and the health of most regional economies.

As such, effective drought policy is complex, and it needs to be integrated with other policy settings. While this brief analysis is nowhere near exhaustive, some obvious questions arise. Have governments done enough to ensure Australian agricultural productivity has kept pace with international competitors? Are producers being appropriately rewarded for the environmental management services they provide, whether in drought or not? Have programs that drive on farm drought management practices been in place for suitable periods? Are the impacts on associated regional businesses and communities addressed?

In defending current government drought policy positions on contentious areas such as the lack of drought declarations or more active support measures that provide greater financial relief as has occurred in the past, governments must be able to prove that the right policy frameworks and investment levels have been in place to enable livestock production businesses to achieve the productivity increases needed to withstand more frequent and deeper drought conditions.

By Travis Tobin