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Rural debt continues to bite in northern Australia

Cassie Hough, Monday April 21, 2014 - 13:26 EST
Farming financial troubles are now spreading from beef to grains. -

Despite government aid packages and some rain, farmers are still struggling in the north of the country.

Financial troubles are now spreading from beef production to the grains industry, with some even facing foreclosure.

Surat farmer Charles Nason is concerned this is just the tip of the iceberg when it comes to rural debt.

"I think people have been struggling for a long time, but they never were game to share it with their mates. I think there's been a huge change in the last 12 months. People are now starting to admit they're having problems."

Mr Nason believes a big part of the problem has been the effects of weather in recent years.

"People blame droughts. I believe in our area it was the floods of 2010/2011 that really caused the problem," he said.

"The current wisdom is you tend to lose a bit of money in a drought, it rains and that's when you make your money."

"It rained for us and I think we lost more money in the floods than we did in the droughts and that amplified the area. When we should have rebuilt our bank accounts it put us further into the red."

An economist who has pushed for the creation of a rural bank says urgent changes are needed to address problems with the rural sector.

Dr Mark McGovern, from the Queensland University of Technology, believes farmers are stuck in a 'double jeopardy' situation.

"The double jeopardy has come about because, not only do we have the usual problems with nature that farmers are exposed to without now having any provisions for exceptional circumstances, there's also been a revaluing down of the book value of assets within the banking system.

"So this accounting change has also given farmers another exposure and it's leading to properties facing receivership."

The Australian Bankers Association was contacted for comment with regard to foreclosures.

In a statement, the ABA says banks provide financial hardship assistance to their customers who may be experiencing financial difficulties and work with their agribusiness customers to assist them manage their businesses and the volatility of cash flows, which can be the result of prolonged drought, natural disasters, or changes in trade conditions.

"It is up to an individual bank to determine when hardship assistance is no longer a viable option for their customer and the bank."


© ABC 2014

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