Good season may not secure finance

Jo FulwoodThe West Australian

A good harvest this year may still not be enough to enable farmers to secure finance to put in next year's crop.

According to Eyre MLA Graham Jacobs, the number of farmers facing financial uncertainty will snowball to more than 600 for the 2014 season, despite good conditions in most agricultural areas.

He warned that the State's big five banks had already made up their minds about the future of agriculture in many parts of the Wheatbelt, saying he had witnessed the attitude of banks to individual farming situations.

"I think there is just no confidence and I suppose they believe that one swallow doesn't make a summer," Dr Jacobs said.

"I get rung up by farmers every week from all over WA and I think, despite any improved situation, there seems to be nothing positive that can be put back into the equation to change the banks' views.

"My suspicion is that they have made up their minds; they are extricating themselves from this space."

Dr Jacobs said in a recent example, a farmer had offered to reduce his debt levels by up to 50 per cent, but the bank still wouldn't change its mind about a deed of forbearance.

"There is something wrong with the lending system," he said.

"It's driven by banks lending for more speculative operations, with the primary commercial driver of shareholder dividends and exceptional and exorbitant executive salaries and bonuses."

Dr Jacobs said that 25 years ago, WA supported 25,000 grain growers; this number had now shrunk to just 4400.

"So where do we go from there? Are we going to keep culling the bottom 10 per cent because they are not efficient?" he asked.

"I would suggest all the inefficient farmers are already gone.

"The ones we have left are faced with high cost of production, poor seasons, static produce prices and no risk mitigation insurance and they are competing against other countries that are highly subsidised.

"There are some significant systemic issues that are stacked against them."

Dr Jacobs has been a vocal supporter of a reconstruction bank, which has also been advocated by the Muntadgin Farmers Alliance.

Spokesman Jeff Hooper said the group had been briefing State-based politicians on the idea in the hope that a State agency could be established if the Federal concept "ever got legs".

Mr Hooper said that at a recent meeting organised by Dr Jacobs, WA Agriculture Minister Ken Baston had appeared receptive to the concept, without making any commitments.

"We explained the reasons why we believe it's important and as we discussed, it's not like we are trying to reinvent the wheel," Mr Hooper said.

But he said he was concerned the banks would still foreclose on some farmers despite a good year.

"We've had calls from people saying that they will be in stronger position equity wise after this season but they are still being told their farm has to go on the market, and we don't think that's right," Mr Hooper said,

"We are looking at it being a good year and it hasn't even been an above-average rainfall year, so if we do get a couple of wet years, imagine what we can do and what we can produce."

But Westpac Wheatbelt division head Chris Moore refuted Dr Jacob's statements, saying his organisation had confidence in the future of the eastern Wheatbelt.

"We have no intention of leaving the eastern Wheatbelt, we've had farms banking with us for over 80 years and we will continue to keep banking them into the future," he said.

"We assess all businesses on their individual merit for ongoing and future funding, and this is not district related at all.

Bankwest State manager WA, rural and regional banking, John Sgambelluri, said no decision had been made about not financing operations in any particular region or area.

"We will continue to review every farming enterprise on its merits and we are excited by what looks like being a terrific harvest," he said.

"Positively, we have added two additional colleagues to our Merredin office and a number of other new colleagues across country WA over the past 12 months to continue to target new business and support existing customers."

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