The Heat Is Online

Australian Drought Halves Farming Incomes

Australia Damaged by Drought

The New York Times, Oct. 1, 2003

CANBERRA, Australia, Sept. 30 - In a nation that calls itself the sunburnt country, it takes a mighty dry patch to reach the record books and knock farmers sideways.

But the worst drought in a century - even kangaroos have strayed from nature reserves to graze on suburban lawns in Canberra - has throttled agriculture and undermined national wealth.

The drought, which has lasted 18 months, slashed farm incomes almost in half, to 7.2 billion Australian dollars ($4.9 billion), in the year ended June 30, according to estimates by the Australian Bureau of Agricultural and Resource Economics.

Agricultural production was down 28.5 percent in the period, slicing one percentage point, or 7 billion Australian dollars, from gross domestic product.

Though the dry spell may finally be coming to an end, with recent good rains in all areas except the north, the drought's impact will continue to be felt for a while, according to the bureau's latest forecast for commodity exports, released last week.

Annual farm exports are expected to fall by almost a billion Australian dollars in the year ending June 30. Crop exports are likely to fare better than exports of livestock products, which are forecast to slump 8 percent from the previous year, to 12.8 billion Australian dollars.

"The 'income drought' associated with the previous poor harvest will continue until farmers are able to market this year's crop," the bureau's executive director, Brian Fisher, wrote in a statement accompanying the forecasts. The effect on livestock industries "will linger longer," he said, as herds and flock are rebuilt.

Australia exports nearly two-thirds of its agricultural products, and the United States is one of Australia's biggest markets, accounting for 11 percent of Australia's total agriculture sales. In the fiscal year 2002-03, exports to America - mostly of beef - were worth $11.5 billion Australian dollars.

A rise in the value of the Australian dollar against the United States currency has compounded the difficulties of exporters, making their products more expensive and shrinking the return on what they manage to sell.

Additional drought-related costs also contributed to a slump in annual average income on the country's 135,000 farms, to 52,900 Australian dollars ($36,000) in 2002-03 from 97,000 Australian dollars a year earlier.

The scorching weather in New South Wales, the state with the largest number of farmers, forced many farmers whose livestock usually graze to buy feed. At a cost of 1 Australian dollar a day for each sheep and up to 4 Australian dollars for cattle, this has leached an extra $3,000 Australian dollars a week on average from these farmers' pockets.

In the last fiscal year, Australia has had to import 340,000 tons of feed, including 53,000 tons of corn, from the United States. It was the first United States corn exported to Australia in at least two decades.

As in America, agriculture is culturally significant here, though it accounts for only about 3 percent of the country's gross domestic product and 17 percent of its total exports. Wheat and beef are among the biggest exports; other agricultural exports include wool, cotton, sugar, fruit and rice.

At this month's World Trade Organization meeting in Cancún, Mexico, Australia joined with developing countries to argue against United States and European farm subsidies, saying such agricultural policies disadvantage its own innovative, efficient and unsubsidized producers.

In the driest inhabited continent on earth, remote areas accommodate huge livestock stations, running to millions of acres, though most agriculture is on the family farm.

There are United States players in the Australian market, too. Australia Meat Holdings, owned by Swift & Company of Greeley, Colo., is the nation's biggest meat producer and processor. Cargill Australia, a unit of Cargill Inc. of Minneapolis, has big operations in oilseed and beef processing, flour milling and grain and cotton trading.

Cargill Australia's commercial manager, Tony Day, said this drought had been much tougher than dry periods in 1992 and 1981. "It's the worst drought in terms of production in crops that we've ever had in Australia," Mr. Day said in a telephone interview.

On a 3,000-acre cattle farm called Garrawilla East in the state's northwest, prohibitive feed costs forced the owner, Robert Anderson, to make a heartbreaking decision. He sold off nearly all his herd.

"We couldn't afford to buy feed, and even if we could have, we couldn't afford to buy water," he said in a recent phone interview.

Having avoided overgrazing on his pastures, he was able to board stock for other desperate cattle farmers.

"Once we got past the fact that we'd sold 100 years' worth of breeding stock, we actually managed better than most," Mr. Anderson said. "At least we weren't staring at dying cattle every day."

He has now switched to boarding cattle for the longer term, trusting that other farmers will need somewhere to graze their stock in the wake of terrible losses of feed crops and the decimation of many pastures.

Crops harvested for humans were also hit hard. According to the National Farmer's Federation, production of wheat and barley fell 60 percent, and that of the thirstiest crop, rice, fell almost 70 percent in the year ended in June.

Though some agricultural prices rose amid shortages - wool, for instance, climbed to record levels - the need to slaughter livestock before the animals starved created a beef glut, causing meat prices to fall 9.2 percent. When Mr. Anderson sold most of his 1,500 cattle in March 2002, he says he secured only 700 Australian dollars a head, about 300 Australian dollars shy of a good year's price. He kept 300 animals to sell gradually when he needed cash and was dismayed when prices fell even further.

He said he still had 100 heifers, all now pregnant, and he planned to sell them with their calves - or maybe keep some to breed.

The government estimates that until the retreating winter broke open the clouds six weeks ago, up to 70 percent of the country was in drought. It has made available almost 1 billion Australian dollars in farm assistance, paying out 235 million Australian dollars so far in direct income support, interest-rate relief, financial counseling and skills training to help landowners avoid having to sell the farm.

More help, though, may come from the Southern Hemisphere's spring, which has brought sustained rains and hopes of a healthy November harvest.

Early last month, the agriculture minister, Warren Truss, announced that while some areas might now see their best crops ever, the government assistance would go on for two years as the herds and flocks are rebuilt.

Mr. Anderson also qualified his optimism. His crops are green only on top.

"If it stops raining now, we'll have 90 percent of this state back in serious drought in a month," he said. "We're right on the cusp. A couple of reasonable falls in the next month to six weeks will take us over the cusp into a good season. They're predicting a worse summer than average this season. That could finish us off."