The impact of COVID-19 on farmers’ debt and finance

Prior to the pandemic, Australian farmers have had to face the worst end of a season of drought, bushfires and flood. This had to lead a major decrease in the population of both cattle and sheep, which in turn has significantly increased the prices of livestock throughout the country. COVID-19 has also affected how farmers trade their goods between states as stricter interstate border policies are enacted.

As farmers struggle to keep up with the rise in livestock pricing and the impending closure of state borders, the issue of repaying farm-related debts has prompted both banks and federal government to take action. The federal government has begun to take initiative in relieving financial pressures these farmers face. Most notably, before the Commonwealth Parliament there is the Farm Household Support Amendment (Relief Measures) Bill, which has two key aims:

  • to remove the provisions which give rise to business income reconciliation
  • to remove the 28-day time limit for conducting a farm financial assessment

These measures include amendments within the Farm Household Support Act 2014 (Cth), most notably extensions for the Farm Household Allowance (FHA) program outlined in sections 7-9. It is proposed in the Bill, a single rate of payment of FHA [which] will provide greater certainty to FHA recipients on their rate of payment… FHA recipients will no longer need to worry whether a debt is raised at the end of the financial year.

Currently, a farm financial assessment is required to be completed within 28 days. This Bill proposes an extension of this timeframe of another 28 days, which provides case officers the ability to consider farmers and their partners’ circumstances and provide them some flexibility in identifying the most appropriate person to conduct the assessment.

In addition to these legislative amendments, the federal government has also announced (on 1 April 2020), a $170 million support package for the international export sector to cope with supply chain issues caused by COVID-19. Red meat, dairy and horticulture exporters who rely heavily on freight cargo to deliver produce internationally, will especially find relief in this support package.

For farmers, there is prospect of debt relief that will allow for an operation of business without such overwhelming pressures. Support services for farmers are available for application through websites such as Rural Aid, Department of Agriculture and Farmer Assist. For more information on the Farm Household Allowance, click here.

Written by Kerry Copley & James Tan 

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