Impacts of NQ’s flooding
THE largest impact event in agriculture right now is the devastation occurring in the northwest of Queensland.
Never before has the Australian beef industry experienced a loss of livestock on this scale. More than 300,000 head have perished under the elements of this freak weather event.
The financial ramifications of such loss cannot be underestimated, particularly given the majority of losses are on breeding properties that will need four to five years as a minimum to return to normal operating income levels.
It’s encouraging to see agencies such as QRIDA mobilising staff and resources to deliver financial support as these producers return to their office and assess the financial impacts of this flood.
This event has also aligned with the banking royal commission, bringing fears that banks will restrict lending to the market in its hour of need. I read the report differently to these fears and see the measures being recommended actually limiting the ability for the banks to impose penalty rates in times of exceptional circumstance.
Further, I see no clear sign the risk metrics of the banks to the agricultural sector will change, meaning access to capital will remain as it is now.
I do however see two recommendations in particular that will impact cost of borrowing.
The recommendation for uniformity in how the banks value rural properties will see more external valuations needed, and therefore will see many borrowers now having to pay valuation fees which they’ve avoided in the past.
This could add thousands of dollars to the borrowing costs of farmers.
Further, the removal of the ability for banks to cover the costs of any broker’s service will see competition significantly reduce, and ensure producers will have to complete their negotiations without support, or now pay thousands of dollars for this support.
We await how the government will implement these recommendations to ensure competition is maintained while also reducing regulatory costs in the sector.
The interesting question is what will these events mean for our region? As the drought continues to bite in the Darling Downs and Maranoa, we do expect to see producers able to move stock to fresh feed in the north as the floodwater recedes.
This will also benefit the north as they’ll be able to start building income streams of agistment until their own stock levels return to normal levels. Further, market forces will dictate an increase in breeding stock prices to enable restocking, seeing anyone with stock to sell returning an increased value.
In saying that, we look to the government to monitor these prices and to intervene if prices become so high as to restrict the ability for northern producers to restock.
These events have overshadowed two other large announcements within the region which will grow Toowoomba and surrounding regions as the centre of agricultural research, training and development within Australia.
The $16 million Agricultural Science and Engineering Precinct at USQ, supported by the GRDC, will see the region lead research outcomes in our agricultural sectors, including grains, cotton, horticulture and ag engineering.
Of course, this research and new technology needs a trained workforce to enact the changes, and TAFE South West Queensland’s Agricultural Centre of Excellence will build the vocational education programs to deliver these skills.
Together, these two centres will see us able to deliver timely and relevant innovation and skills training programs directly to industry.