National Farmers Federation

Transcription

1 National Farmers Federation Submission to the Annual Wage Review March 2011 Page 1

2 Contents 1. INTRODUCTION ECONOMIC ANALYSIS WEATHER EVENTS MINIMUM WAGES FRAMEWORK WAGE REVIEW DECISION... 7 Page 2

3 1. Introduction 1. The National Farmers Federation (NFF) was established in 1979 and is the peak national body representing farmers, and more broadly, agriculture across Australia. The NFF s membership comprises all Australia s major agricultural commodities. 2. The current membership of the NFF comprises the following organisations: State Farming Organisations AgForce Queensland NSW Farmers Association Victorian Farmers Federation Tasmanian Farmers and Graziers Association Western Australian Farmers Federation Northern Territory Cattleman s Association Commodity Councils Cattle Council of Australia Cotton Australia Australian Dairy Farmers Ltd Canegrowers Sheepmeat Council of Australia WoolProducers Ricegrowers Association Australian Dried Fruits Association Associate Members Corporate Agriculture Group (an unincorporated organisation comprising Auscott Ltd, Twynam Pty Ltd, Australian Food and Fibre Ltd, PrimeAg Australia Ltd, Paraway Pastoral Fund, Wyalong Rural Investments, Warakirri Agricultural Trusts and Clyde Agriculture Pty Ltd) Ridley Corporation GrainCorp Australian Livestock Exporters Council Australian Livestock and Property Agents Association Australian Veterinary Association Goat Industry Council of Australia Pastoralists Association of West Darling 3. There are approximately 135,000 farm businesses in Australia (99% of which are family owned and operated), utilising 54% of Australia s landmass. The agricultural sector, at farm-gate, generates approximately 3% of Australia s total Gross Domestic Page 3

4 Product (GDP). The gross value of Australian farm production in was $41.8 billion However, when factoring in the value adding activities post farm-gate, and the value of all the economic activities supporting farm production in the farm-input sector, agriculture has averaged a contribution of 12.1% of GDP (approximately $155 billion in 2009) In 2009, Australian farm exports were valued at $32.1 billion. This accounts for approximately two-thirds of Australia s agricultural production. Agricultural product accounted for 15% of Australia s merchandise exports Australian agriculture continues to be challenged to maintain a low cost base in order to remain globally competitive. Indeed, Australia s balance of payments is strongly dependent on this being the case. 7. The challenge for farmers within the domestic market continues and grows. As price takers, farmers are constantly facing pricing pressures which has been evidenced recently in the milk price debate which is likely to drive lower returns. 8. While most of the east coast is no longer drought declared, the catch up effect on farm profits arising from 9 continual years of drought is ongoing. Additionally, the impact of cessation of Exceptional Circumstance assistance in most areas may have an effect on re-employment of labour. 9. While the average financial performance of Australian agriculture is projected to improve in in comparison to due to high rainfall in eastern states and in general terms higher prices for most commodities, the average does not reflect the anxiety felt by many farmers as they have faced floods and cyclones in the east and northern Western Australia while others face severe drought conditions in southern Western Australia. As such the good average forecasts are masking the grim reality for many individual farmers. 1 ABARES, 2009 Australian Commodity Statistics, Canberra 2 Australian Farm Institute, March 2005, Australia s Farm Dependent Economy and ABARES, Australian Commodity Statistics ABARES, 2009 Australian Commodity Statistics, Canberra Page 4

5 2. Economic Analysis 10. The Australian Bureau of Agricultural and Resource Economics (ABARES) has recently published the March Quarter 2011 edition of Australian Commodities which identifies detailed economic data both reported and forecast for the agricultural and resources sectors Key economic analysis by ABARES for broadacre and dairy farms that represent 68 per cent of commercial scale Australian farms is summarised as follows: Overall broadacre farm financial performance is projected to improve in Average farm income is projected to increase from $58,000 in to $82,000 in If the forecast is met this will be the highest recorded in real terms since Farm cash incomes are projected to increase in all eastern states because of increased crop and livestock production and higher prices for broadacre commodities. Farm cash income is also forecast to slightly increase for dairy farms in southern regions. (Farm cash income is a measure of cash generated after payment of all costs but excludes capital payments and payments to family workers). In the west the figures are significantly different with reduced farm incomes expected for broadacre farms in Western Australia due to severe drought. The wet conditions in the east and drought conditions in southern Western Australia have resulted in wide variations in the financial performance of farms across states and industries. Further, forecasts for farm cash incomes in the eastern states would have been higher for if it were not for a substantial decrease in grain quality as a consequence of strong rainfall during harvest. High rainfall, flooding and cyclones have damaged farm infrastructure which are expected to result in increased expenditure on repairs Further details as to individual commodity specific economic analysis can be found in Australian Commodities. 4 ABARES, Australian Commodities, Vol 18, no 1, March Quarter ABARES, Australian Commodities, Vol 18, no 1, March Quarter 2011 Page 5

6 13. In terms of employment in agriculture the figures remain steady at around 318,000 directly employed in Australia agriculture The complete agricultural supply chain, including affiliated industries, provides over 1.6 million jobs to the Australian economy (or 1-in-6 of all Australian jobs). 3. Weather Events 15. After a positive move towards drought recovery in early 2010 in the eastern states of Australia, a number of significant weather effects have affected many parts of Australian agriculture. These events will create significant outlier effects on the averages otherwise reflected in the ABARES forecasts. 16. The NFF submits that these larger than normal variations in farm cash incomes need to be considered in the context of the annual wage review and in particular the capacity for on-going employment for the low paid in many of these adversely affected regional economies. 17. ABARES has identified that the flooding events alone in 5 states has reduced agriculture production by around $2.3 billion in These costs do not take into account the cost of lost farm infrastructure and other infrastructure support. 18. It has been further forecast that Cyclone Yasi has caused a further $300 million in damage to agricultural production The impact of drought in southern Western Australia has resulted in a forecast by ABARES of a cut in farm cash incomes in Western Australia of around 35% below the average for the 10 years to The capacity for farmers to rebound from the severe weather events will depend on the rate of recovery. 21. While it is acknowledged that some costs associated with severe weather events are covered in some limited circumstances government assistance and/or insurance there is always a component of costs not covered by that assistance or assistance has yet to be forthcoming. Further, the assistance does not take into consideration lost income and production during the period of recovery. 6 ABS Labour Force Detailed Quarterly Data. 18 March ABARES, Australian Commodities, Vol 18, no 1, March Quarter 2011, p 16 8 ABARES, Australian Commodities, Vol 18, no 1, March Quarter 2011, p 16 9 ABARES, Australian Commodities, Vol 18, no 1, March Quarter 2011, p114 Page 6

7 22. The capacity of Australian farmers to capitalise from the water in the system whether irrigated farming or dry land farming will depend on rainfall in future months and the amount of moisture retained in the soil. 4. Minimum Wages Framework 23. Part 2-6 of the Fair Work Act 2009 provides the framework for the determination of minimum wages for national system employees. 24. In meeting the minimum wages objective the NFF submits that the Fair Work Australia Minimum Wages Panel (FWA) is required to consider a balanced approach focussing on mutual wellbeing rather than consideration weighted by notions of competing interest in determining the most appropriate safety net of minimum wages. 25. In meeting that objective the NFF submits that a focus is required on the following key principles: The needs of the low paid are inextricably linked to the capacity of employers to maintain viable jobs; Secure the well being of employees and employers through economic strength; and Consider broader safety net measures that interact with the minimum wages Wage Review Decision 26. In consideration of the Wage Review Decision the NFF strongly urges Fair Work Australia (FWA) for a level of restraint in consideration of the variables in the Australian economy as a whole and in specific consideration of agriculture the individual farming families and their employees in the middle of recovery from adverse weather events. 27. In addition, FWA also needs to consider any cost implications arising from the transitional arrangements from pre-modern awards including Division 2B awards. 28. In consideration of the economic circumstances of the agriculture industry and the role of the setting of minimum wages, the NFF submits that an increase of no more than $10.10 per week to all minimum wages may be justified effective from the first pay period on or after 1 July Page 7