WHEN live cattle exports to Indonesia were suspended in June 2011, industry representatives spoke at the time of dire and far-reaching consequences – losing incomes for 12 months or more, job losses for people associated with the trade, and the possibility of producers needing welfare amongst them.
At the time, drought wasn’t even part of the equation.
By 2013, companies such as AACo, Australia’s largest beef producer, were reporting a quarterly loss of $46.5 million as northern cattle unable to find markets joined the flood of Queensland producers unloading when the summer wet season failed to materialise.
It has all compounded into a very grim picture for cattle producers, highlighted by a recent survey conducted in Gulf and Cape regions, from the Cook shire to Boulia.
Just over a quarter of all grazing enterprises in the 14 shires responded to the survey and they showed that everything predicted as a result of the export ban has come true, and more.
Property values have declined by 28 per cent, debt levels have risen by 22 per cent between 2010 and 2014, and there has been a sixfold increase in debt held with small businesses and service providers in small towns and regional centres throughout the north.
One of the few positives is an average herd size of 7700 head amongst respondents at the end of the financial year, meaning that cattlemen still have a reservoir of stock to help rebuild.
Although the survey highlighted a lot of pain, 72 per cent of the people who filled it out said they planned to continue indefinitely in agriculture.
Another 12 per cent said they would still be there for between five and 15 years.
Despite this, confidence in the future viability of grazing enterprise is not strong – only 18 per cent are fairly confident, compared to 56 per cent who are not confident at all.
The strongest reasons for the lack of confidence are the low profit margins being experienced and the poor sale prices being received.
Respondents also strongly believe costs are too high, and 40 per cent lack confidence because they have too much debt to repay.
Amongst those who did express confidence, good equity, diversified income and new trade agreements were the main things giving them a brighter outlook.
Fully 92 per cent of respondents believed better or stabilised prices for their product were what was needed to improve their profitability, followed by a reduction of debt levels and a decrease in input costs.
Debt was one of the main issues honed in on.
Three-quarters of people answering said their access to finance was somewhat or much more difficult since the ban.
Nearly half of them said their banks had imposed tighter conditions or changed conditions and the same number said they had been asked to provide more details to their banks.
Other changes by banks included the imposition of higher interest rates or increases in overdraft margins or being refused finance altogether, or being asked to sell assets to reduce debt.
Well over half of the people in the survey said changed financial arrangements had extremely affected their profitability this financial year, and 67 per cent expect it to keep on affecting them beyond 2014.
Despite a “banks are bastards” mantra in some sectors, the majority of bank relationships are reported as good or excellent and of those who have had to sell farm assets to service finance commitments, only 16 per cent were requested to do so by their bank.
Another 29 per cent said asset sales had been their own decision.
Virtually no alternative solutions – debt write-offs or refinancing – were suggested instead of fire sales.
- 74 per cent say they have been unable to maintain herd and plant to the same standard and 30 per cent say the value of their plant and herd has dropped by more than 40 per cent, with a further 32 per cent saying their herd and plant have dropped in value by 30-40 per cent.
- 58 per cent say they cannot maintain land condition (environmental health) to the same standard.
- 71 per cent would like to access financial planning, 45 per cent will need to access Centrelink assistance, and 54 per cent would like to access counselling for mental health/depression.