The National Farmers’ Federation and their Dreamtime.

“In economics the majority is always wrong.” J K Galbraith.

The National Farmers’ Federation of Australia, the National Party and the Liberal Party, together with the Australian Labor Party, all believe that Australian agriculture can raise its production to $100 billion  at the farm gate by 2030.

That is an increase of 66.6% on the production of 2018 or an annual increase of about 4%, and presumably, though they haven’t said as much, they all expect the producers to make a profit every year— which is more than they do now — but they don’t tell you that.

There are some truly grim truths about the financial ill-health of Australian agriculture and they are all produced by government statisticians and the Reserve Bank of Australia.

Why these grim truths were ignored by the NFF when they set their $100 billion target, and why that target was endorsed by those who determine the the agricultural policy of this country, is for them to answer.

It would appear that there isn’t a minister for agriculture in Australia today, at both the federal and state level, who had any qualifications or hands on experience in agriculture or (agricultural) economics prior to being appointed to their agricultural portfolio. Even worse they all seem to have many other portfolios and being only human, the time they can spend on agriculture has got to be limited.

This must mean that our ministers of agriculture rely on advice from the federal and state government agricultural bureaucracies, the state and national farmer organisations and those stalwarts of Australian agriculture, the MLA and the GRDC, who are kept fat by the millions of dollars of compulsory deductions levied on producers.

Ben Rees; B. Econ.; M.Litt. (econ.)

Ben is a seriously underutilized elder statesman in Australian agriculture, probably because he deals in facts, not emotional subjective dreaming in which many in the so-called high echelons of agriculture in this country indulge.

Ben recently presented a paper to the Royal Society in Queensland. For the complete article Rural Debt and Viability click on the link above and then at the bottom of the page when it comes up click on: Ben Rees on rural debt and viability. I will try and post the complete article on this website as soon as I can.

You may not agree with Ben’s opinion — but it will make you think and make you wonder what the so-called leaders of agriculture do in their working time — time, which we all pay for.

Just a glance at Graph 11, lifted from one of Ben’s papers, demonstrates that the problems facing Australian agriculture today have not been caused by drought and will not be fixed by building new dams — the rot started years ago — it’s called debt.

Compiled From: ABARES commodity statistics Australian farm returns, costs and prices, 2006& 2018. Rural Debt from RBA, Table D9 Rural Debt, RBA Statistical Tables, online. (Ben Rees)

 

This is what Ben writes about Rural debt, gross value of farm production and net value of farm production: Graph 11 illustrates the impotence of the RBA to deliver required real sector policy. By 1983, GVFP was rising at the expense of NVFP. Beyond 1983, any relationship between debt and GVFP NVFP evaporates. Upward inflections in the debt curve are identifiable in 1988 and 1993 following tariff reform. Any relationship between GVFP and debt cease to exist beyond 1993; and; finally in 2003-04 the debt curve rises steeply cutting through the GVFP curve. Finally the GFC effect slows down the rural appetite for debt. From 2017, the debt curve gradient begins rising more steeply than the GVFP curve indicating that rural production is again being funded by rising indebtedness. Some good old fashioned fiscal policy was badly missing. (Ben Rees)

Nobody involved in agriculture providing they can understand basic economics like 2 + 2 = 4 – 4 = 0 can fail to see the the agricultural tragedy contained in Graph 11.

Australian agriculture has been on a productivity binge for the last fifty years. Since 1990, the gross value of farm production has grown from about $20 billion to where it is today at about $60 billion, a growth of some $40 billion or 200% in thirty years. Whereas the net value of farm production has grown from about $5 billion to about $20 billion an increase of some 300% during the same period, which looks great until we examine the debt, (red line) which has grown from $10 billion to just under $70 billion during the same period, an increase of an astounding 600%.

This increase in farm production has occurred as the number of farms has decreased. In 1970 we can see from Graph 11 that rural debt was just a few billion dollars and there were about 180,000 farms, the numbers are too small to calculate. By 2016 farm numbers have reduced to 100,000 (the NFF claims there are just 85,000 farms) and the debt has risen to ~$77 billion and by 2019 that debt has risen to $80 billion.

If we divide 100,000 by $80 billion it gives us an average farm debt of $800,000, and that is for all farms producing over $25,000. It doesn’t end there. In a publication produced by the federal Department of Agriculture and Water Resources for the  Royal Commission into Misconduct in the Banking and Financial Services Industry in 2018, it is claimed that 70% of the aggregate broad acre debt was held by just 12% of farms.

On average these were large farm who produced some 50% of the total value of broad acre farm production in 2016-17. It should be noted that debt figure does not include the total credit facility limit which was estimated in the same paper at a whopping $86 billion. For many with large cropping enterprises an annual overdraft facility can, in the short term, double their debt exposure. No wonder so many feel as though they are standing on the edge of an abyss when the weather does not perform as planned.

The increasing debt levels have followed the increase in land values as shown in Figure 1. The ability to borrow against an asset, as we all know, has nothing to do with the ability to repay a debt. If the Royal Commission into Misconduct in the Banking and Financial Industry revealed anything it was that the banks were more than willing to lend against rising equity levels without determining whether the debt could ‘reasonably’ repaid by the borrower. It also showed that they showed no mercy to those who, for whatever reason, defaulted. Rural debt continues to rise at over a billion dollars a year.

However, the alarming result of the spiraling debt, highlighted by Ben Rees, is that $1 of debt is now needed to produce 64 cents of production as shown in Chart 1. Whereas in 2003/4 one dollar of debt produced $1 of production and in 1989 one dollar of debt produced $2.14 of production. What kind of crazy economics is that?

The billion dollar question must be, ‘How many dollars of debt will be needed to generate one dollar of  production on the road to achieving $100 billion at the farm gate?’ Maybe the NFF have the answer?

Have another look at Graph 11 at the widening gap between net value of production and gross value of production. That graph begs the question whether there will be an acceptable margin between costs and returns to repay what now seems to be an inevitable mushrooming of debt.

Figure 1Thatcherism

Not many in the Australian Labor Party today will recognise that those two great reformers, Hawke and Keating, were devout disciples of Margaret Thatcher, and as a result of their adoption of ‘Thatcherism’  and its mantra of ‘the market economy’ Australian agriculture suffered as market support was gradually reduced to where it is today — virtually non existent.

What Hawke and Keating and all successive Australian Governments have failed to recognise is that the adoption of the market economy philosophy around much of the free world in the eighties and nineties did not affect the  huge ‘market support’ or subsidies paid to agriculture.

Without US$580 billion in annual subsidies farmers in the EU  , the United States of America and almost every country around the world could not survive.

Australian producers receive world prices for their exports and have some of the highest costs  and the lowest yields in the world, particularly in wheat production — their competitors also receive world prices for what they produce, but they also receive  government subsidies.

Where price is king  in the food markets of the world it isn’t rocket science to conclude that Australian producers face severe competition in both our domestic and overseas markets.

Have a look around the supermarket shelves in Australia and see what is imported, and what, once-upon-a-time, was grown and processed in Australia.

Australian supermarkets scour the world for the cheapest food they can buy and every time they bring more food into Australia, they put another nail in the coffin of Australian agriculture.

One of the reason that rural debt is increasing is because of land purchase. Farmers have been buying more land in an effort to benefit from an economy of scale. Fewer workers because the sheep have gone has meant bigger machinery, bigger machinery means bigger borrowing. Again, it ain’t rocket science. The quwstion is, has it worked?

 The Cost of Debt Funded Production.

Let us now look through Ben Rees’ prism at farm debt over time and what producers have been able to produce with that debt, Ben writes:

Chart 1 below empirically analyses debt to output as a policy efficiency performance indicator. The orange curve is Debt/ Gross Value Farm Production (GVFP) whilst the blue curve is calculated by dividing GVFP/ Debt.  

Compiled from; ABARES commodity Statistics 2017; and, RBA Rural Debt Table D9 online 2018. Ben Rees.

 

2.1 Performance Indicator Outcomes

  • Steeply positive gradient long term orange trend curve ( Debt/GVFP)
  • Orange curve suggest that production has been debt dependent
  • Steeply negative gradient blue long term trend curve ( GVFP/Debt)
  • From 1984, declining efficiency as debt relentlessly consumes production
  • In 1989, $1 debt produced $ 2.14 in output.
  • By 2003-04, $1 of debt produced $1 of output
  • In 2010, $1 of debt produced 64 cents in production
  • From 1993 to 2013, sectoral performance lies below the negative sloping blue trend curve.

By any reasonable assessment, Rural Adjustment has not delivered theoretically expected outcomes from economies of scale, increased efficiency and rising productivity. Post 2003-04, both curves identify debt funded output as inefficient and unstable. Any other sector would have demanded a change in policy direction; but, agricultural leaders appear to have strongly believed the rhetoric of market theology that reduced farmer numbers structuring economies of scale would ensure long term sectoral viability. That simplistic arithmetic approach by industry leaders, major political parties; and, commentators has been a gross violation of established economic knowledge.

Ben is right. We must conclude that there is no plan for agriculture in Australia apart from that being offered by the NFF and endorsed by all political parties.  What does that say for their understanding of established economic knowledge?

Is debt going to strangle Australian agriculture?

In October 2018 the National Farmers’ Federation (NFF)  presented Australian agriculture with an enormous challenge —a vision for the future:

17th October 2018

The National Farmers’ Federation (NFF) has laid  down a bold vision for the industry: to exceed $100 billion in farm gate output by 2030.

Based on our current trajectory, we know industry is forecast to reach $84 billion by 2030. This suggests that we still have significant work to do over the next 12 years if we are to achieve our vision.

To support their plan, the NFF have developed a road map which tells us how Australian primary producers from wheat, sheep and beef producers to bee-keepers and everyone in between what the ‘road’ is to the national farm gate producing $100 billion by 2030.

The NFF road map is complicated. I wonder how many farmers, agricultural producers and their advisers and critically, their bankers, those who lend them money, have read it — and more importantly, been able to understand both the map and their position on it?

There is no doubt that agriculture in Australia requires re-structuring. Whether the NFF Road Map is the way forward I leave for you to decide.

Is $100 billion by 2030 now the clarion cry of Australian agriculture?

To produce $100 billion of farm gate output by 2030 will require a 66.6% increase measured in dollars of production across the face of Australian agriculture in a little over ten years.  Seriously?  Given our recent history of growth is that figure realistic? 66.6% growth would require an annual 4% nominal growth rate in  the Gross Value of Farm Production (GVFP).

There are three ways of achieving the NFF vision:

  • Assume that the gross value of farm production (GVFP) will increase by 66.6% and assume that yields will not and producers will make a profit or:
  • Assume that yields by  will increase by 66.6% and prices will do what they seem to have by-and-large done over the last ten years and remain constant or decline and producers will make a profit.
  • A mixture of both of the above and assume that rural debt will continue to increase and producers will still make a profit.

A 66.6% increase in the dollars generated at farm gate in what is now just  10 years is a massive ask. Maybe the NFF are banking on new rural industries to help reach the target and well they may, but realistically, surely, the heavy lifting will have to be done, as usual, by the producers of wheat and beef and to a lesser extent canola, wool and sheep meat.

If there is one common thread that runs through all of the research I have put into this article so far, it is that Australian agriculture faces global challenges from ernest competitors who can produce and ship product into markets where we are active at a price which Australian producers would find and more importantly are already finding, difficult to match.

Australia has a large range of different beef products to offer overseas consumers but needed to differentiate itself from competitors through better communications and messaging, the MLA said. Photo MLA.

Our reputation for quality is appreciated by those who can afford it, but as markets expand, like the exponential growth of the middle class in Indonesia and China, so too does the market for products of a lesser quality than that which is available from Australia. Prime examples are buffalo meat into Indonesia at the expense of Australian beef and Australia’s massive loss of market share to Argentina and the Baltic States in the wheat market of the same country. The last one is hard to explain when we can almost see Indonesia from two of our major export ports in Western Australia.

What do the Banks think?

The Commonwealth Bank are  not as optimistic regarding growth as the NFF, their view, as a major lender, is that production will fall across all agriculture mainly due to a drop in rainfall. A 50% drop in grain production and a 40% drop in livestock by 2060 is predicted. If  Australian agriculture is to reach the NFF target of $100 billion by 2030 it will need the support of the CBA.

In contrast to the Commonwealth Bank there is a publication called Australian National Outlook – 2019. The joint Chairmen of Outlook 2019 are Dr Ken Henry AM when he was Chairman of the NAB and David Thodey AO, Chairman CSIRO. The publication is a joint effort by over 50 contributors from some 24 organisations who forecast a better picture than the Commonwealth Bank, but with many challenges for agriculture and for the nation, it is worth a read.

Beware, it is complicated, ambitious and apart from some wild assumptions on climate change, (my personal bias) a very well thought out document, and in many ways it is a pity it is not a fundamental part of the national conversation on the future of agriculture.

It makes one wonder whether those in the NFF who claim to lead this fine industry really understand, seek or accept the considered opinion of others who are already major participants in the industry of agriculture in this country. What is of note is that the Australian National Outlook forecasts a far more modest growth to $80 billion in agricultural production but by 2060, rather than the NFF target of $100 billion by 2030.

The NFF say they consulted widely before settling on the $100 billion target: The NFF led a 6-month consultation effort to inform the Roadmap. It began with a Discussion Paper which distilled insights from leading experts, before commencing a nationwide roadshow, where we spoke to over 380 farmers and other industry experts to field their views. As we consolidated this feedback, we engaged regularly with industry stakeholders and experts to ensure the ideas we’re putting forward are credible and impactful.

The NFF say they have consulted with 380 farmers.  They claim there are 85,681 farmers in Australia. So they consulted 0.4435055% of farmers in Australia in the preparation of their Road Map! Hardly statistically significant.

It is also reasonable to ask whether the NFF consulted with the CSIRO, the NAB and any the fifty other industry brains who contributed to the Australian National Outlook 2019 who have a different view of the future to that of the NFF.

The has been a massive loss of knowledge and skills in agriculture.

What really shook me from Ben’s analysis of the agricultural economy, is the loss over the last thirty years of experience and skill in agriculture — this must surely present this industry with a huge challenge? Again, this is from Ben’s paper:

4.1 Performance Indicator Employment

ABARES commodity statistics for 2018[i] , shows agricultural employment peaking historically in 1990-91 at 387, 000; but, falling to 279 000 in 2017-18 (29%). Meanwhile for Australia, over the same period, employment rose from 7.8 million to 12.5million (60.3%). It stretches the mind to think the decline in agricultural employment alongside such strong national employment growth is explainable by consolidation of farm size and applied technology. Agricultural policy needs to accept responsibility for this employment outcome.

The reality is that structural industry reform began with the 1988 tariff reductions which were ratcheted up again in 1991. Orderly marketing of both major industries wool and wheat were discontinued over 1989-90. It cannot be explained as mere coincidence that agricultural employment began to decline from its peak in 1990-91 as a result of technological adoption by the farm sector at the same time structural reform of agriculture began in earnest.

Chart 3 identifies empirically that agricultural employment contracted strongly across broad-acre agriculture; and, the self – employed small scale farmer. Broad-acre employment decline appears from 2002 coinciding with the worsening of the Millennium Drought. The real loss of employment though lies in the self -employed and owner manager classification from 1992 onwards. The impact of the self- employed owner manager is particularly important as that group comprised largely the part time skilled labour force residing in rural Australia. Policy driven policy of Rural Adjustment   “shipping out” small inefficient farmers would seem a more logical contributor than technology.

[i] ABARES commodity statistics, 2018, Table 1.2 , Australian employment by sector.

  • Long term decline in broad acre employment 52% between 1992 -2018
  • Self-employed fall 71.4% between 1992 to 2018 (192 000 to 55 000)
  • Millennium Drought emerging1997-2009
  • GFC 2009- 2013
  • 2013+ Current Drought

The decline in agricultural employment whilst employment in the wider economy continued to rise strongly is a damming policy indicator. If agriculture was likened to a private firm, a clean out of the board, senior management, and advisors would be expected.

How true!

In the next issue of Global Farmer we will examine whether our main agricultural industries of beef, sheep and grain, are capable of playing their part on the road to achieving  $100 billion by 2030. The question must be asked can they do it and more importantly, who has already claimed they can, because somebody has? Haven’t they?

 

NAB Fleecing Struggling Farmers – Now they must pay Restitution.

The Fleecing of Australian Farmers.

The headline on the front page of The Australian of July 24, 2018,  ‘NAB promises to stop fleecing struggling farmers’.

The Cambridge Dictionary defines ‘fleecing’ as;  ‘to take someones money dishonestly by charging too much or by cheating’. The Legal dictionary defines ‘restitution’ as; n. 1) returning to the proper owner property or the monetary value of loss. Sometimes restitution is made part of a judgment in negligence and/or contracts cases.

The NAB has admitted that it has fleeced (stolen from) some of its farmer customers and now, having realised the error of its ways, promises it won’t do it again. Isn’t that great?  Will the other banks now admit to stealing? They should, because they all behaved in the same callous and reprehensible manner if the evidence presented to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is anything to go by. Only a few of the many, many farmers who have been ‘fleeced’ will get the chance to testify, how many nobody knows, but the commissioner in reply to a question from Bob Katter MP has indicated that they won’t be forgotten. It may well be that Bob Katter has secured an extension of time for the Royal Commission to hear more from farmers. There is never any question where Bob Katter’s heart is, it’s with the people on the land. It’s a pity there weren’t a dozen politicians from rural electorates in court to give the commissioner a reminder, not that it seems he needs one, of the fleecing that has gone on in the bush.

Continue reading “NAB Fleecing Struggling Farmers – Now they must pay Restitution.”

There will be no Australian wheat industry in 23 years time.

Image result for photograph of the Chapman Valley geraldton
Chapman Valley. Northern wheat belt Western Australia. The Garden of Eden.

 

In the last issue of the Global Farmer I discussed the need for change based on a strategic plan for the behemoth called Australian agriculture. It is not possible to look at the whole until the parts have been examined.
To start with the wheat industry is logical and relevant considering this is the time of year to review last year and make plans for and give a commitment to the next season and beyond.

The headline says it all, based on current trends, the wheat industry in Australia will be gone in twenty three years. If you are having difficulty in trying to remember what was going on in Australian agriculture twenty three years ago, it was five years after the wool price crash and we were all being told to get rid of our world beating merino sheep. That is how close we are to the demise of the Australian wheat industry. It won’t happen like the wool crash, for those who refuse to recognise the signs it will be a slow, painful and imposed exit.

Continue reading “There will be no Australian wheat industry in 23 years time.”

Is the Australian wheat industry finished?

 Screen Shot 2017-01-19 at 3.39.04 pm
Two reports from the Australian Export Grains Innovation Centre (AEGIC) on the competition Australia will almost certainly face from Ukraine and Russia in the wheat markets of the future should be compulsory reading for all wheat farmers in Australia. They provide a sobering analysis of the wheat market and will force the sensible to seriously contemplate their future.

 

We live in a fantasy world, a world of illusion. The great task in life is to find reality.

Dame Iris Murdoch 1919 – 1999.

Stranger than fiction.

The post harvest stories, some of them as close to fiction as one can get without the author claiming to be a novelist, have recently appeared in both the national and the agricultural media. Minister Joyce is on the front foot; that is when it isn’t in his mouth, determined to persuade the Australian electorate, through a compliant media, that all is well in Australian agriculture and that the emerging Right in politics in Australia (Hanson) and around the world (Trump and Brexit), has nothing to offer to those who live outside the ever increasing majesty and grandeur of the State capital cities of Australia.

I have used the words ‘majesty and grandeur’ quite deliberately. Around Australia billion of dollars has been spent on State capital cities, much of that money is for the enjoyment and the pleasure of those who live in those cities. As we shall see, as billions has been spent on shoring up the city vote with new sports stadiums and the like, the infrastructure vital to agriculture has been allowed to deteriorate and in some cases decay to the extent that we are no longer world competitive — we can no longer, at times, but ever increasingly, compete for markets around the world.

The Nationals heartland is in rural Australia, it’s the country folk who get them into parliament. In WA they did a deal with the Liberal Party, which put the Liberals into government and some National members into key positions in the WA Government. Again, and have we seen it too often, a minority determining government policy? The Nationals are now worried that Hanson, the Hunters Shooters and Fishers Party and maybe others will replace them in Parliaments around the country and in so doing, replace them in holding the balance of power.

Minister Joyce wants everyone in the country to believe that record high prices for livestock and an ever-increasing demand for wool are the beginning, as one journalist put it, of a ‘golden era’ for the farmers of Australia.  Coupled with what some are calling a record harvest, what could possibly go wrong for Minister Joyce and the wheat farmers of Australia? Well this for starters. Continue reading “Is the Australian wheat industry finished?”

National Bank Bastardry – Part III – Greed.

Money and Greed Conquer All — Including the Law?

So who in this land of the free protects the weak and poor, like the Cronin family, from the financially strong like Ferrier Hodgson and the National Australia Bank? The answer is nobody, at least nobody that we have been able to find—we are still looking.

Man walks up to jewellers shop window, chucks a brick through it, grabs a couple of trays of diamond rings and then an hour or two later finds himself wearing steel bracelets and in the back of a Paddy Wagon.

His mate, who the robber had taken into his confidence, had hidden around the corner, took a video of the robbery, sold it to the police and collected the reward.

No excuses for the NRL player recently videoed behaving very badly, but the cockroach, the traitor who took and sold the pictures got something like $40k from the media scum is different. That cockroach deserves a punishment far worse than that metered out to the player.

The other one dobbed in his mate and if he has any vestige of a conscience will have to live with his treachery all of his life.

What motivated the two video enthusiasts? Greed. Greed caused the Global Financial Crisis and few if any ‘on Wall Street’ who caused that crisis were punished, they took their government funded retirement packages and disappeared as wealthy men.

Money Never Sleeps – Neither do the Greedy.
Gordon_Gekko
Gordon Gekko

Perversely the 2010 film ‘Wall Street-Money Never Sleeps’ the sequel to the famous 1987 film ‘Wall Street’ starring Michael Douglas became almost cult films. Both stories concentrated on greed and both, apparently, caused a rush of graduate applicants both in America and the UK wanting to work in the banking industry.

One of the few advantages of being over a three quarters of a century young is (thankfully) I can still look back with a deal of clarity and compare yesteryear with today. Don’t jump to conclusions—this is not about the good old days. I have only reached this age because there are cures for what killed many of my ancestors. ‘Jack the Magic Dancer’ is not the man he was and I continue, helped by some very clever people, to beat him. I cannot help but compare our wonderful health system with our antiquated legal system. It is as if we are frightened to change, little realising that an antiquated legal system increases the cost of the health service. Think about it.

My age and my experience were on my mind a lot while was writing the last two episodes of the Global Farmer. I have contemplated if the world has changed or whether I have? Whenever I have started to write this series, the word GREED has materialised on the screen—so I thought this month I should pay it some attention.

I should also declare I have only been to one mortgagee’s sale in my life. I only went to fly the flag. I was a farm manager so the chequebook wasn’t all mine but there was nothing to stop me, for a mate, pushing the bidding if needed.

I saw the mortgagor’s wife in tears while she was serving tea and sandwiches with the other ladies from the CWA. I didn’t stay for the sale. The mortgagor had borrowed to pay a family member out who was a ‘sleeper’ in the family farm. Then we had two dry years and he had a fire over half the farm. I learned later they had a good sale, the neighbours rallied round so he didn’t need me after all. Someone bought his farm ute and gave it back to him.

Then I heard that a neighbour had bought the farm from the receivers and leased it back to the original owner. That was back in the 70s. Maybe many of us were still pulling chains and rakes around clearing land, just like those before us had done going back generations? Maybe there were too many ‘battlers’ there to kick a ‘mate’ when he was down? There were the exceptions of course, there were the ‘greedy’ ones hunting a bargain, but the neighbours outbid them.

Continue reading “National Bank Bastardry – Part III – Greed.”

Part II of National Australia Bank Bastardry – Is Breaking the Law Legal?

https://upload.wikimedia.org/wikipedia/commons/a/af/Aachen_Allegory.jpg
The Triumph of Justice by Hans von Aachen.

Persistence.

The Cronin family deserve answers from Ferrier Hodgson and the National Australia Bank, answers which at the time of writing they are both either refusing to answer all questions or they are giving what can only be called puerile reasons for delaying answering our questions. The law protects the mortgagor. The law says that all the financial activities of the receiver manager and the manager in possession for the mortgagee, must be transparent and made available to the mortgagor. The National Australia Bank and their appointee Ferrier Hodgson appear to disagree with the law. So persistence is our only recourse.

The stand out feature following the publication of ‘National Bank Bastardry’ in the last issue of the ‘Global Farmer’ was the number of people, including those on Facebook, who encouraged us to keep on going with the story and wished the Cronin family all the best for Christmas and especially for a better New Year. Many identified with the Cronin’s problems, some related ‘tough’ experiences with their bank and as a result, did not want to go public with either their name or their story, except to say they had one. That is not a healthy relationship between borrower and lender – between the farmers and their banks. For every Charlie Phillott in Queensland and Cronin family in Western Australia, it appears there are many others with similar stories, which will never be told.

Smoke Screens and Threats.

Harold Cronin wrote to Ferrier Hodgson (FH), appointed by the National Australia Bank (NAB) as the receiver managers and manager for the mortgagee in possession of what was formerly Chambejo Farms, the Cronin family farming business. He asked for a copy of all (two or three) the valuations on Chambejo Farms that FH had commissioned from a firm of valuers, Opteon, and for which Chambejo Farms had paid. Harold wrote based on this advice:

  • The Corporations Act obliges receivers to keep financial records that “correctly record and explain” transactions they enter into while they are controlling a company. Directors and shareholders of the company have the right to inspect those records. These provisions appear in section 421 of the Act.

What follows is the body of the letter he got back from FH. It appears to be the very antithesis of section 421 0f the Corporations Act. If you don’t want to read the whole letter here is a short review, you should read the letter, because it’s a blinder:

FH wrote back to Harold and stated that they couldn’t release the information he requested because they, FH, had signed an agreement with Opteon invoking the Privacy Act 1988. Their contention was and is that the results of the valuations, paid for by Chambejo Farms as mortgagor are secret and unavailable to Chambejo Farms unless they signed an agreement, which absolved Opteon and FH from any action or proceedings based on the valuations. Even if they signed, it only meant that FH and Opteon would further consider the request; in effect they could still say no. It’s true – FH and Opteon wanted Harold and his family and their Trustee in Bankruptcy to give them an escape from possible prosecution. Why would they do that? It’s obvious isn’t it?

Continue reading “Part II of National Australia Bank Bastardry – Is Breaking the Law Legal?”

National Australia Bank Bastardry ?

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An unnecessary foreclosure by the National Bank of Australia in 2013 has left a couple who pioneered the Ravensthorpe area destitute and reliant on the old age pension. Their only possessions are their furniture, a far-from-new Jeep station wagon and their clothes. They live by ‘grace and favour’ on a friends farm. As you will see, because of a legal precedent, there is every reason to believe that National Australia Bank may have acted in contravention of the law. The question we have to ask as laymen is; is there now a case for damages against the National Australia Bank and if there is, from where do those who believe they have been damaged get the money to pursue one of the most powerful corporations in Australia, who are well known to have bottomless legal pockets?

After seizing their farms in May 2013 and putting them in the hands of Ferrier Hodgson (FH) as receiver and managers and agents for the mortgagee in possession, the National Bank of Australia (NAB), on November 11 2015, informed Harold, Barbara and Christopher Cronin, formally of Chambejo Farms Pty Ltd, that the NAB and FH, over  28 months, spent an amazing $6.0 million dollars, in what can only be called a failed attempt to recover a $6.0 million debt from Chambejo Farms.

Final returns were submitted to ASIC by FH in September 2015. If Harold Cronin had not asked the NAB and FH for the details of the costs and returns regarding the sale of the assets and properties that had comprised Chambejo Farms, recent experience has shown there is no reason to believe that the information would have been volunteered by either the NAB or FH.

On the contrary, FH and the NAB have been obstructive and repeatedly refused to provide information to the Cronins. The Cronins now know why FH did not wish to publicise what some might call their incompetence. We will show that FH were and are obliged by law, to provide detailed information to the Cronins as mortgagors.

As you will see later it is open to question, by their actions, whether both organisations abrogated their obligations under Section 420A(1) of the Corporations Act and their obligations under common law to act in good faith, particularly when it comes the family home.

It is open to speculation if this is what the NAB board and senior management really think of farmers after a couple of bad seasons? It’s certainly not their public position.

Does the NAB management not understand that farming is all about risk? The Cronins weren’t on their own after the bad seasons of 2011 and 2012. The records show many farmers in their region went deeply into debt in those two years.

“It’s ironic,” says Harold,  “That 2013/14 was a very good season in the Ravensthorpe area and had we been allowed to put a crop in, it would have solved most of our financial problems.”

Continue reading “National Australia Bank Bastardry ?”