A version of this article first appeared in the Coffs Coast Advocate on Saturday, 28th September, 2013
It’s been said many times: there is a crisis of profitability in Australian agriculture. Many factors are involved, including drought, the high Australian dollar, softening commodity prices, and the market power of the duopoly.
In May this year the Australian Financial Review reported that ‘at least 80 farming operations worth more than $1mn across Australia are in receivership or some form of financial distress.’
Debt levels feature prominently in this picture. According the Australian Bureau of Agricultural Research Economics and Science (ABARES), total farm debt for broad-acre farms averaged $476,000 as at 30 June, 2013. For dairy farms, average farm debt was $701,500. Debt levels in the Queensland beef industry have increased 500% in under 20 years, with most of the increase coming in the post-GFC period.
Commenting on the AFR report, financial blogger Steven Johnson of Intelligent Investor wrote,
“Any Australian farm funded with more than 50% debt is a Ponzi operation. There are thousands of them.”
Low interest rates bring some relief, and have been welcomed by the NFF. Before it left office, the ALP introduced a two-year Farm Finance package worth $420 mn of concessional loans (interest-only payments for 5 years, before reverting to market rates). But in the absence of a genuinely ‘farmer-friendly’ national food policy (which would likely include substantial tax breaks), this package, which is also supported by the incoming administration, may simply be deferring the inevitable.
At the other end of the scale, smaller scale farmers selling into niche local markets are successfully exploring a different financing alternative: crowd-funding. With its origins dating famously to Joseph Pulitzer’s 1884 campaign that raised $100,000 from 125,000 people to complete the pedestal of the Statue of Liberty, crowd-funding has really taken off alongside the rise of the social network era of the internet. US platforms such as IndieGoGo, GiveForward and KickStarter have helped artists, musicians and others raise tens of millions of dollars, mostly in small donations from large numbers of individuals, to enable them to make music videos, write books, fund travel and a host of other projects. Pledges are made securely via encypted software (using a credit or debit card), as you would do if you were purchasing a book on Amazon.com, and typically are only redeemed if the campaign reaches 100% of its target figure within the alloted time frame.
In Australia, the Pozible website (www.pozible.com) was launched in May 2010, and by August 2013 had raised $13 mn for more than 4000 projects. These have included in the past few months: $12,000 to send 5 Australian farmers to the Via Campesina global conference in Jakarta (June 2013), $27,570 to finance an on-farm butchery at the free range heritage pig farm, Jonai Farms in Daylesford, Victoria (June 2013), and $29,250 to finance the making of Just Food, an Australian-first Fair Food documentary (August-September 2013).
In the Coffs region, the owners of Nana Glen Synchronicity Farm, Josh and Tomoko Allen, recently launched a pozible campaign, seeking to raise $30,000 to finance a ‘gourmet food hub’ based on their property. As well as creating a farm-gate store which will be an additional market outlet for local producers, they intend to build a community facility for educational workshops on organic farming, permaculture, aquaculture, shitake mushroom farming and a venue for long table farm lunches to support access to good food for community members on low incomes.
Josh and Tomoko sell their heirloom fruit and veg at the Sunday Harbourside Market and the Nana Glen general store. Their campaign has around one month to run.
The project is in its early days, but it would make an important addition to food retailing diversity for this region. The food hub sector in the US is booming, with over 100 now in existence. It’s also starting in Australia, with projects in Casey, Trentham, Shepparton and Kyabram, amongst others. For more information, visit www.foodhubs.org.au.