Home' National Farmers Federation : Annual Review 2008-2009 Contents 26 NATIONAL FARMERS' FEDERATION ANNUAL R EVIEW 2008-09
In the short-term the NFF has
been concerned to ensure:
• Future access to fnance by farmers;
• Clarity on the impact of banks treatment
of loan securitisation and associated issues
such as grain storage and associated
marketing decisions by farmers;
• The impact on domestic and global
customers' access to finance is minimised;.
• A reduction in interest rates for farmers
as much as possible and as soon as
• A monitoring of the impact of the
In the long-term, the NFF is concerned
• The impact of negative international
trade policy responses is minimized;
• The impact on longer term demand profles
for soft commodities is monitored;
• The impact on land values should banks lose
confidence in the agricultural sector and soft
commodity prices fall be monitored; and
• The impact of the drought on debt levels
and debt servicing levels is monitored.
Despite these challenges, the underlying
fundamentals for Australian agriculture
remain strong and it should be noted that
while economic growth within the United
States (US) and European Union (EU) are
forecast to plummet, the Asian region
(excluding Japan) -- which comprises a
whopping 35% of Australia's agricultural
exports -- is expected to fare much better.
Economic Stimulus Package
In response to the global financial crisis,
the Federal Government introduced a $42
billion stimulus package in February 2009.
This followed the Government's $10 billion
package in late 2008 aimed at the retail sector.
The NFF welcomed the second package
as it relates to agriculture and regional
Australia. In particular, the drought hardship
grant measure, investment in regional
infrastructure and the tax break for small
businesses (including farms). These are
positive measures that will have both short
and long-term benefits, which complement
the capacity-building plan laid out by the
NFF in our Federal Budget Submission 2009.
The NFF provided members with a
summary document highlighting the key
elements of the stimulus package, with
particular emphasis on the farm sector.
It's often taken for granted, but the Australian
farm sector is as vital to the Australian economy
today as ever before. Now, in the midst of an
economic crisis, people are starting to realise it.
The September and December 2008
quarterly national account figures were a
reminder of just how fundamental the farm
sector is to our economy, with agricultural
production and growth -- in seasonally
adjusted terms up 13.4% and 10.9%,
respectively -- helping to stave off recession.
Australia would have well and truly
been in recession if not for the growth
achieved by the Australian farm sector.
These results also back the NFF's assertion
that the underlying fundamentals of
Australia's farm production are rock solid.
Managed Investment Schemes
& Carbon Sink Forests
In December 2008, the Australian Taxation
Office (ATO) lost the test case in the Federal
Court on Managed Investment Schemes
(MIS). The Court found that MIS investors
are effectively carrying on a business and
are, therefore, eligible for the up-front tax
deductions. This essentially means that the
ATO will continue to issue product rulings
for MIS projects. The ATO have indicated that
they will not be appealing the decision.
While the Court has provided clarity about
the interpretation of the MIS law, the NFF
continues to press the Federal Government
for a political solution, through its review of
agribusiness MIS. The NFF argues that the
MIS laws are not appropriate for regional
Australia, particularly when land-use decisions
are involved. This issue will escalate with the
emergence of the Carbon Pollution Reduction
Scheme (CPRS) that will add further incentives
for forestry as a regional land-use option.
The NFF also engaged with the Government
regarding the new carbon sink forests
legislation. While there is a low risk
that the new provisions, in isolation,
will lead to large scale changes in land-
use, we reinforced member concerns
that when viewed in conjunction with
existing MIS forestry incentives and
the CPRS, that perverse environmental
and land-use outcomes can arise.
Specifically, we called for a comprehensive
review of the full suite of taxation-based
incentives for forestry in the context of the
CPRS. This review must analyse the potential
for negative externalities to emerge from
the combination of incentives, including
reduced water availability, biodiversity
implications and negative social and
economic impacts on regional communities.
The NFF also stressed to Government the need
to ensure that appropriate, comprehensive
information is made available to farmers
on their responsibilities in claiming a
reduction for capital expenditure for the
establishment of trees in carbon sink forests.
Economics & Trade WITH CHARLIE McELHONE
WHILE the global food crisis dominated headlines in 2007/08, the past year has
seen this superseded by the other GFC - the global financial crisis. This international
economic meltdown has caused significant uncertainty for farmers, agricultural
production and entire regional communities.
The NFF's Federal Budget Submission 2009 asserts
the majors issues for Australian farmers.
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