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Drought policy must adapt to a changing climate

Richard Heath - Thursday, October 25, 2018
Tomorrow the Federal Government is convening a summit to address the devastating drought currently afflicting Eastern Australia, to unite national efforts in coordinating action to support drought-affected families and communities. 

January to September rainfall in 2018 has been the second lowest recorded since 1900 for the Murray-Darling Basin, and September rainfall was the lowest ever recorded nationally. This is a drought of historic proportions resulting in desperately tough conditions for farm businesses and their interdependent rural and regional communities. There is an obvious and urgent need to provide emergency measures and relief to ensure that these communities are sustained, that farming families can put food on the table and that animals do not starve. 

Responding to the immediate issues will understandably be the focus of the summit, however if participants abdicate their responsibility to also genuinely address better frameworks for long-term preparedness and resilience then the exercise will be a failure. 

"Climate change is fundamentally changing Australian agriculture’s exposure to drought"

In addition, another critical acknowledgement must be made if there is a true desire to move agricultural policy to a position where these sorts of summits are no longer needed. Climate change is fundamentally changing Australian agriculture’s exposure to drought and if the impacts of climate change are not explicitly addressed in drought policy then we are doomed to accelerating cycles of increasingly burdensome short-term measures. 

Droughts can no longer be regarded as abnormal or exceptional events. Climate science tells us that droughts will happen more frequently, be more severe and most importantly that the periods between droughts will be subject to more extreme weather, making recovery even more difficult. The Government’s response must move beyond emergency measures which provide relief from the impact of drought to a suite of measures that address drought as part of a whole-of-agriculture policy.

Stories of drought devastation get most of the media coverage, but there are many untold stories which are more significant for agriculture’s future in Australia. These are the stories of extraordinary resilience and improvements in farming technology and practice, resulting in production that would have been inconceivable not that long ago: harvestable crops that have received less than 25 mm of rain; grazing properties maintaining ground cover through judicious pasture management, good stocking decisions and regenerative practices.

"Accelerated research into resilient farming systems .... must be part of any long-term drought measures"

These significant improvements in farming practice are a reflection both of Australia’s world-leading capacity in research and development and the quiet resolve of Australian farmers to get on with implementing solutions to climate change disruption, regardless of the prevailing policy environment. To extend these existing improvements nationally, accelerated research into resilient farming systems and incentivisation of practices which provide ecosystem benefit (often costly for the farmer) must be part of any long-term drought measures.

Even with improvements in farming practice there will still be periods of extreme climatic conditions, such as the current drought, which will significantly impact the ability of farm businesses to generate revenue. Change in drought policy incorporated in the Intergovernmental Agreement of 2013 aimed to move Government assistance away from direct support of farm businesses and towards social welfare safety nets for individuals and families. One of the intended consequences of this shift was to free up the market for commercial provision of risk management tools such as farm income insurance. This hasn’t happened.

Every country in the world that has mature and functioning markets for financial risk management in agriculture has relied on Government assistance of some kind to spark the market into life. In Australia, farm income insurance has thus far been a market failure. This is a big issue when national drought policy relies on farm businesses being prepared and resilient yet the market for provision of products that enhance farm businesses ability to become financially resilient is virtually non-existent. 

"... development of the required market tools (for agricultural risk management) will not happen without incentivisation"

Climate change impact will mean a diminution in the periods of relative climatic stability during which balance sheets can be rebuilt in preparation for the next drought. As well, these periods are likely to be subject to other extremes such as heat waves, frosts and floods. Reliance on ‘business as usual’ without the option of a range of affordable income insurance products or weather derivatives to provide financial resilience is simply unrealistic. If preparation and improved resilience rather than direct support of businesses is the desired model for drought management – which it should be – then Government must recognise that the development of the required market tools will not happen without incentivisation.  

A large part of this summit will naturally be spent focusing on how to assist those currently experiencing desperate hardship due to drought. If the outcomes of the summit fail to also look forward – well beyond the next election cycle – and propose a genuine national approach to dealing with the impact of climate change on agriculture, then countless others in the farming and broader communities will inevitably suffer the same hardships in the future.

 
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