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Making the most of drought awareness

Richard Heath - Tuesday, August 07, 2018

The drought has not happened suddenly, but suddenly it’s mainstream news. I have been asked to do several media interviews in recent weeks and each reporter’s focus has been the effect that the drought might have on grocery prices. Since drought is a recurring feature of Australian agriculture there is precedent to call on and - as this paper from John Quiggin outlines - during previous periods of extended drought, grocery prices have risen by about twice the rate of inflation.

The resultant headlines when this information is reported are inevitably: ‘food prices to skyrocket’. While I am not entirely comfortable with alarmist headlines like this, I am realistic about the modern media business model relying on clicks per story, and that certainly is a very clickable headline. But although this angle does highlight the severity of the drought, is it actually highlighting or helping those who are most affected? Sure, food consumers might see an increase in food prices for a while; farmers and the communities that rely on them, on the other hand, will experience a soul-destroying reduction of income for an extended period of time.

The most constructive spin that can be put on these sorts of headlines is that more people might join the dots between food and farms. There is a belief that countries which have experienced severe food shortages in recent memory consequently have more respect for farmers. I am not sure that there is evidence to support this proposition, however it fits with the logical narrative that communities which are completely disconnected from their food supply will have no interest in supporting policies that protect those supplies. Out of sight out of mind, after all. ‘Grocery prices to skyrocket due to drought’ is at least making those connections clear between food and farmers. The next step is to make sure that those connections translate into an awareness of agriculture and the policies that affect the security of agricultural production at all times, not just when the opportunity presents for alarmist headlines.

"The vast majority of modern Australian farm businesses are resilient, innovative and prepared for drought... but they can always be more prepared, and there are policies and incentives that can help them"

These sort of headlines, along with the stories highlighting the desperate realities of hardship and heartache that dominate the news cycles when the drought is at its worst, prompt political responses that are visible and immediate. No-one will begrudge cash grants to desperate families and communities at their lowest ebb, just as in the in the aftermath of floods and fires. But cash grants will do nothing at all to build resilient farming businesses that are adaptable to drought and a changing climate. When the next drought comes along, we are likely to see the same alarmist headlines - and the same short-term policy fixes.

For long-term solutions, we need to look at what the majority of farm businesses are doing to get through this drought, and there are plenty of them out there. They are preparing for drought by diversifying, by investing in innovation to crop smarter, by storing fodder and grain, by putting in water points and more effective grazing systems.

The vast majority of modern Australian farm businesses are resilient, innovative and prepared for drought. But they can always be more prepared, and there are policies and incentives that can help them: incentives which reward farm businesses for investing during good times in innovation and preparedness. Currently investment in innovation is often a trade-off between improved practice and a strong balance sheet which provides financial resilience during downturns. Policies to ‘de-risk’ investment, such as accelerated depreciation, result in both productive and financial resilience as the investment in innovation leads to better practice without quite the same impact on the balance sheet.

So when long term solutions are put to government in the future, let’s hope that the memory of ‘grocery prices to skyrocket’ is triggered, the connection between farm performance and food prices is made, and forward-looking, proactive policies are supported.

 
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