ABSTRACT. All delegates attending the Pre-Conference Workshops register at this time

ABSTRACT. It is argued in this presentation that Australian governments’ approach to the provision of financial assistance in response to drought is in need of significant reform. The analysis considers the potential role to be played by loans provided by the government to farm businesses in periods of adversity which are quite unlike the type of loan assistance usually (and currently) offered. We explain that there is a better way, which simultaneously offers higher levels of default insurance and a greater capacity to help more farms, which is for loans to be repaid depending on a farm’s future revenue streams. While the economic case for taxpayer subsidies for drought relief is contestable, our approach sits comfortably in the literature with the general promotion of income stabilisation instruments for agricultural credit.

The presentation examines earlier work on the value and viability of an income (revenue) contingent loan for drought relief and promotes for consideration a specific linkage between this policy instrument and Farm Management Deposits in a single credit risk minimisation program for farmers. It is argued that policy reform along these lines would allow farm businesses the important opportunity for income smoothing and, because of the nature of the collection mechanism through the tax system, a scheme of this genre would curtail the prospects for moral hazard. Moreover, unlike the historically typical approach with loans, it is stressed that only a revenue contingent approach to loan collection is able to remove all default risks associated with the provision of credit.

ABSTRACT. The monsoonal wet-dry tropics of northern Australia are dominated by natural hazards, and present a particularly challenging context for farming systems and agricultural policy.  There is no 'drought' as such, if drought is defined as a period of exceptional rainfall deficit extending over several seasons, but there are at least seven months in the middle of every year during which any rain at all is exceptional and evaporation rates are extreme.  The winter Dry seasons are separated by summer Wet seasons in which torrential monsoonal rains cause extensive flooding that swamps roads and rail lines and can leave communities cut off for several months.  These relatively predictable extremes are punctuated by much less predictable discrete events in the form of destructive cyclones in the Wet and destructive bushfires in the Dry, that across northern Australia burn an area larger than Germany every year.  Natural hazards, along with under-researched tropical pests and diseases, present formidable agronomic challenges to farming in the north.  Much higher input costs,  difficulties in securing skilled labour at critical times, and vulnerable supply chains over vast distances present formidable economic challenges.  Bruce Davidson's classic 1965 treatise The Northern Myth has yet to be effectively rebutted.

Notwithstanding this challenging context, State, Territory and Commonwealth Governments have periodically turned their gaze to the north and seen tantalising opportunities.  We are in such a phase at the moment, with the White Paper on Developing Northern Australia envisaging large-scale expansion of northern agriculture and exports.  This presentation will assess prospects for northern development, reviewing analyses of why past attempts have failed, and proposing policy measures that might help to manage risks for future proponents and taxpayers.  There may be lessons for southern Australia here in the volatile north where extremes are normal and expected.

ABSTRACT. For over 100 years the Bureau of Meteorology has been providing weather, climate and, more recently, water information to assist farmers and others manage the risks and challenges of Australia’s highly variable and often extreme climate. Managing drought is perhaps the greatest such challenge and the Bureau provides a range of products and services to assist agriculture and water managers in meeting it. This presentation will outline these existing products and services, including rainfall based drought monitoring, soil moisture modelling, water storage information and seasonal climate and streamflow forecasting. It will also outline possible future directions for drought services for Australia based on developing capabilities and also stakeholder feedback received through a round of workshops held across Australia to better understand needs for weather, climate and water information to manage drought.

ABSTRACT. Frequent severe droughts can financially cripple rainfed farm businesses and farmers need effective business strategies to survive. This paper draws on a longitudinal dataset of farm businesses in grain-growing regions of Western Australia where low average annual rainfall and occasional drought is commonplace.  The farm sample includes farms that experienced consecutive severe drought in 2006 and 2007. A range of business indicators are examined; business equity, operating profit per hectare, return on capital, and the debt to income ratio. Drought altered these indicators for almost all farms and recovery was slow for most businesses. Farms with high business equity at the start of the study period could accommodate the erosion of business equity attributable to drought. Interestingly farms with initial low equity were the most likely to enhance their equity position by the end of the study period, despite seemingly having the fewest resources to do so. Farms that were able to capitalize on favourable conditions in years other than drought were better placed to enhance or recover their financial position. Farms that cropped a higher proportion of their farm area were at an advantage with the percentage of area cropped having a small but significant effect on the debt to income ratio, the return on capital and operating profit. Farm diversity also favourably lessened the debt to income ratio. Other factors, including farm size did not influence the outcome of any business indicator. Farms that remained resilient, despite the serious droughts were those that cropped more than 50% of their farm area, were prudent in their expenditure, maintained some enterprise diversity and often generated wheat yields in each year that were near the yield potential for that year.

ABSTRACT. While the economic and environmental impacts of drought have been widely studied, there are few large-scale studies that examine the broader social impacts of drought. The Australian Institute of Family Studies identified this as a priority area for research and organised the collection of data for the Regional and Rural Families Survey in 2007. This paper analyses that survey to measure the extent to which drought affects financial stress, farm production, mental health (drug and alcohol), social capital and community cohesion. Drought has a direct impact on farm production and the agricultural sector, but the broader social impacts of drought on people who are not directly involved in agriculture are often both substantial and significant. Policy-makers needs to take into account these impacts in order to design an effective response to future droughts

ABSTRACT. Whilst the Water Act (2007) and the ensuing Murray Darling Basin Plan discuss requirements to account for long-run impacts of land use change on basin water balance, there has been little quantitative integrated hydro-economic analysis of the issue or options to manage it to date. In a global context of increasing likelihood of climate action, carbon sequestration from reforestation could play a large role in mitigation and current Australian policy, with the majority of recent climate fund payments to land based mitigation, supports this approach. However, resulting interception of rainfall runoff may impose high irrigation, water supply and/or environmental flow costs. This presentation will present the CSIRO Australian National Outlook framework for assessing plausible and internally-consistent global scenarios for Australian food, land, energy, water, and biodiversity outcome to 2050. The framework involves an Australian high spatial resolution land use model linked to a global integrated assessment: climate, energy, food and economy model. The presentation will describe application to assessment of potential economic benefits of policy to manage fresh water supply, carbon sequestration trade-offs for the Murray-Darling Basin in futures with  significant carbon planting incentive. Results show potential for substantial flow losses from increased interception absent policy to balance carbon water trade-offs. Irrigation opportunity cost in excess of carbon sequestration economic value is estimated for a scenario assuming flow was maintained by reducing irrigation water supply.  In contrast, estimated value of integrating interception from new carbon plantings with irrigation into a water trade system was $3.3 billion and $2.0 billion (2050 annual value) for strong and moderately strong global climate action outlooks with our reference case assumptions and robust with benefit estimated at over $1 billion annually at 2050 over a broad set of sensitivities tested. Concluding discussion will outline how the likelihood that incentive conditions conducive to large carbon planting response may only arise on long and difficult-to-foresee time scales, how this leads to a challenge around choices in further water  property rights development and options to deal with this challenge.

ABSTRACT. Panel Discussion – An end-user and practitioner perspective

Nico Padovan - Department of Agriculture

Mick Keogh - Australian Farm Institute

Jay Horton - Strategis Partners

ABSTRACT. This talk will discuss the current drought in the Western US, with particular attention to California. The main drivers of the current drought will be identified, along with current and past actions within the agricultural, municipal, environmental, and governmental sectors that set the stage for the current situation. Particular attention will be given to highlighting current challenges and opportunities that confront the Western US in its effort to increase its’ resilience to drought and water scarcity, and some recommendations for moving forward.

ABSTRACT. Residual risk is generally understood to be the risk remaining after efforts have been taken to mitigate risk.  It is an inevitability because a risk free world is an impossibility.  Yet the concept as currently construed may not serve well disaster-relevant policy making.  The term residual fails to signify how much what is not mitigated determines post-disaster devastation.  The term risk is too narrow to capture the full array of what happens when a given state is not always followed by the same pattern of transitions.  Consequently, to overcome these deficiencies and to advance disaster-relevant policy making requires thinking about “core indeterminism.”

ABSTRACT. Drought conditions typically focus our nation’s attention on increased efficiency, water reform measures and regional hardship. Yet it also commonly results in calls for crops perceived as ‘thirsty’ to be banned. These typically include cotton and rice—or annual crops. In this paper we argue for the value of these crops, not just as commodities but as a critical requirement during extended dry periods on a variety of levels. We also examine the situation in the US where annuals provide a decreasing component of the cropping mix, with very serious impacts.

ABSTRACT. This talk will examine the development of a study that is attempting to model farm exit across Australia from 1991 onwards. Numerous databases on farm prices, farm exits etc are being put together to understand the main drivers of exit, and to understand how regional social, economic and weather characteristics influence the number of farmers in Australia.