Drought assistance for Australian farmers

On August 5, 2018, Prime Minister Malcolm Turnbull said the current drought conditions, especially in the eastern part of the country, are “the worst he’s ever seen”.

To help ease the strain, the Federal Government has announced an extra $190 million in assistance to help drought stricken farming families, whereby eligible households under the Farm Household Allowance (FHA) Scheme will be able to claim up to $12,000 extra in addition to the fortnightly payment they receive under the scheme.

The announcement was made following a listening tour of NSW and Queensland in early June, where farmers had the chance to voice their concerns to Prime Minister Turnbull, Deputy Prime Minister, Michael McCormack and Agriculture Minister, David Littleproud.

“We can’t make it rain, but we can ensure that farming families and their communities get all the support they need to get through the drought, recover and get back on their feet,” Prime Minister Turnbull said.

If you are affected by the drought, these are the financial support you could have access to:

The Farm Household Allowance was introduced in 2014 to provide financial assistance to farmers in strife.  Recently, the scheme was amended to reflect the hard-hitting drought conditions a significant number of farmers are facing.

Under the changes, eligible farmers and their partners can now receive the FHA for four years instead of three. This allows farmers a little breathing space to form and implement a self-sufficient financial plan.

The FHA is paid fortnightly that totals $16,000 a year for eligible families. In addition to cash payment, farming families who qualify also receive:

On August 5, Prime Minster Malcolm Turnbull announced extra assistance to those eligible for the FHA. Under the new measures, families will receive up to $12,000 in two lump sum payments, on September 1, 2018 and March 1, 2019.

Couples in a household will receive up to an additional $12,000 and single households will receive up to $7200.

The Government will also make it easier to qualify for the FHA by increasing the net asset threshold cap from $2.6 million to $5 million, which means farmers who have up to $5 million in net assets locked up in their farms will now be able to access the FHA payment.

“This will help farmers who may be notionally asset rich but cash poor access additional support without having to jeopardise the income-producing capacity of their farm by selling farm equipment,” said the Prime Minister.

“It is estimated an additional 8000 farmers could become eligible for FHA support.”

Some criteria that farmers have to meet to be eligible for the FHA include:

For more details on eligibility and to apply, visit the Department of Human Services website or call the free Rural Financial Counselling Service on 1800 686 175.

From 1 July 2018, farmers need to apply to the Regional Investment Corporation (RIC) for the Commonwealth’s farm business concessional loans.

The RIC offers two types of loans - Farm Investment Loans and Drought Loans.

In cases of drought, eligible farmers can apply up to $1 million in loan from the Government to help them get back on their feet. The criteria you have to fulfill to apply for a loan is not dissimilar to those set out in the FHA scheme. To be eligible for an RIC drought loan, the applicant must:

Like with the FHA, applicants must have a drought management plan in place and detail how they will use the loan, and how they plan to recover from the drought.

Farmers can find out more information and apply for a loan from the Regional Investment Corporation website

The FMD scheme is essentially a risk-management tool to help eligible primary producers manage uneven cash flows. Under the scheme, they can set aside pre-tax income from their farming operations in years of high income, which they can draw on when they need it.

The scheme is designed to increase the self-reliance of Australian farmers and help them meet their business costs in low-income years by building up cash reserves.

Income deposited into an FMD account is tax deductible in the financial year the deposit is made. It becomes taxable income in the financial year in which it is withdrawn.

To be eligible for the FMD scheme, farmers must comply with the following conditions:

Under the scheme, farmers can:

However, a primary producer may be exempt from the 12 month rule if they are affected by drought or if they receive a Category C recovery assistance under the Natural Disaster Relief and Recovery Arrangements.

A primary producer under the FMD scheme can withdraw their FMDs before 12 months without losing any taxation benefits as long as they:

More information can be found on the Australian Tax Office website.

In addition to pumping extra cash into the FHA scheme, the Government has also announced a boost in funding to the Rural Financial Counselling Service (RFCS) which is a free financial information service to assist farmers in need.

According to the Government, the extra $5 million injected into the RFCS will make a serious difference for the estimated 19,000 farmers who are potentially eligible for the FHA but have not applied for it.

There are 12 RFCS providers across Australia which are able to offer state-specific assistance.

Services the RFCS can provide include:

While the RFCS offers information on financial support and ways to access them, they are not qualified to provide family, emotional or social counselling; or financial advice.

Call 1800 686 175 to find the nearest rural financial counsellor, or visit the Department of Agriculture and Water Resources website.

The Farm Debt Mediation Scheme protects farmers’ rights by ensuring banks and creditors offer mediation to farmers before attempting to recover any debt on farm mortgages.

Farm debt mediation is a structured negotiation process where a neutral and independent mediator assists the farmer and the creditor to try to reach agreement about current and future debt arrangements.

The mediator's role is to facilitate the discussion and they will not provide advice on the matters in dispute. People who are suited to fill the role of mediator are solicitors, accountants, rural financial counsellors or other advisers.

A farmer generally has about 21 days to respond to an offer to mediate, otherwise the creditor can commence action as normal.

Currently, only NSW, Victoria and Queensland have legislated FDM schemes in place, with South Australia next in line to implement one, while Western Australia operates a voluntary scheme.

In addition to the Federal Government assistance packages, the states of New South Wales and Queensland are also offering extra help to assist those badly affected by the drought.

In NSW, the drought is at its worst in years, with most of the state suffering a “severe deficiency” of rain, according to the Bureau of Meteorology (BOM).

The NSW state government has recently announced a $500 million Emergency Drought Relief Package to ease the strain felt by farmers in the state.

The package includes the Drought Transport Subsidy which offers eligible farm businesses a transport subsidy of up to $30,000.

The subsidy is back-dated so farmers can apply it for freight expenses incurred since January 1, 2018. The subsidy covers 50 per cent of the full cost of freight up to a maximum of $5 per kilometre and 1500km per journey.

The subsidy can be applied for the cost of transporting fodder, water to a property for stock, stock to and from agistment, and stock to sale or slaughter.

In addition, the NSW government has also waived a series of farming fees and charges such as the Local Land Services rates, heavy vehicle registration costs and more. More details can be found on the NSW Department of Primary Industries website.

In Queensland, there is a Drought Relief Assistance Scheme (DRAS) in place which is offered by the Queensland Government and administered by the QLD Department of Agriculture and Fisheries.

It covers freight subsidies as well as a water infrastructure rebate. Under the scheme, producers with drought declared properties may be eligible for:

Producers with a property that has had its drought declaration revoked may also be eligible for the subsidies but to a lesser extent, such as subsidies for transporting livestock returning from agistment and subsidies for transporting livestock purchased for restocking.

The maximum amount available under DRAS is initially a total of $20,000 per property, per financial year, but producers can apply to extend the limit to $30,000 if required. However, to obtain the extra assistance, producers will need to prepare a drought management plan for their property and have it endorsed by a DAF officer.

In response to the horrible circumstances currently experienced by farmers, multiple organisations and businesses across Australia have banded together to organise charity drives which proceeds will go towards supporting the welfare of the producers affected.

The National Farmers Federation (NFF) has joined forces with Channel Nine and Rotary Australia to set up the 2018 Drought Relief Fund, from which 100 per cent of donations will be directed to relief organisations making an impact on the ground.

You can donate to the 2018 Drought Relief Fund by visiting racws.org.au.

Buy A Bale is a drought appeal campaign that channels its funds to delivering hay bales and other essential items to farmers who have no feed left for their cattle.

In addition to donating on the website itself, you can also participate in a series of fund-raising activities that donate to the campaign such as sausage sizzles at Bunnings and the Parma for a Farmer initiative in which $1 for every parma sold at participating outlets will go towards the Buy A Bale campaign.

The Australian Red Cross has always been there to lend a helping hand to Australians in need and this time, it is no different.

You can help by donating to the Red Cross Disaster Relief and Recovery Appeal, in which 100 per cent of the donations will be distributed to drought affected communities via partner agencies.

The Drought Angels is a not-for-profit organisation which not only allows people to donate online, but also encourages Good Samaritans to organise fundraising events to raise funds ala Biggest Morning Tea for the Cancer Council, except all the funds raised will go to supporting rural communities in need.

Don’t forget - farmers are the ones growing the food we put on our table, so don’t be a scrimp in these desperate times. Dig deep and help a farmer, a fellow Aussie and a fellow human being.

Know of any assistance services or charities that we can add to this list? Let us know!