There can be few among us who have not witnessed the distress and trauma in the eyes, demeanour and behaviour of relations, friends and associates when they are confronted with the awful news that their creditors have appointed receiver managers.
They stumble and fall as they search for a quiet place to go through all the emotions that well up inside of them. Fear, resentment, shame, humiliation, panic, anger, rage, embarrassment and guilt. For far too many, it is more than they can endure and they withdraw from family and friends and the society in which they live.
Some have a breakdown from which they never really recover. Some, unable to cope, take their own lives.
I must make a few things absolutely clear. Contracts should be honoured; debts should be paid as and when they fall due. For every willing borrower there has to be a willing lender. Prior to the Global Financial Crisis (GFC), Australia, like most of the developed world was awash with money. The Global Farmer explored the rise and rise in land prices in a previous article, ‘Self Inflicted Injury’.
The crucial difference in the philosophy of lending today compared to when I was a young man , over fifty years ago, is that these days there seems to be a complete lack of understanding with so many bankers that agriculture is a risky business. Their public face, which no doubt senior management and their boards see, is different to what happens in the real world. At least that has been the experience of the subjects of this story and I believe many more.
Many years ago, when agriculture was Australia’s biggest exporter and we had learned some bitter lessons from the evictions of the Great Depression, banks were set up in all states and federally, to cater for the special needs of primary producers, they understood risk.
It was recognised at that time by governments and the banking industry, that when all is said and done, farmers have different banking needs to the businesses on the high street. Put simply farmers, those who make a living from agricultural enterprises, from million acre stations to relatively few acres of horticulture, are different because they have no alternative but to gamble huge amounts of money on the weather and as exporters, put their faith and their produce on fickle international markets, which can be and are manipulated by the strong nations. Most of the world pays subsidies to farmers so they can manage the bad seasons and prices. Australia does not believe in subsidies.
When Australia entered the modern era of bank deregulation, rural banks disappeared and with them a culture of an understanding of agriculture formed by generations of experience in the bank and in government, but there was no room for that thinking any more.
Bob Hawke and Paul Keating are credited with moving Australian banking into what was at that time the modern Thatcher and Reagan theory of economics, which made rural banks and special purpose banks like the Commonwealth Development Bank (CDB) an anachronism in the face of what they believed to be progress.
In March of this year, several years work on behalf of a few dedicated farmers, academics and politicians failed to convince the Senate Economics Legislation Committee of the merits of a bill described as: The bill is a private senators’ bill co-sponsored by Senators John Madigan and Nick Xenophon. It proposes to amend the Reserve Bank Act 1959 to establish an Australian Reconstruction and Development Board (ARDB) of the Reserve Bank of Australia (RBA). The ARDB would have the task of forming and implementing a rural reconstruction and development policy. For the full report here.
If we had a bank similar to that proposed in the ARDB. A bank philosophy that recognised the special needs of farmers – that recognised there is a difference between running a business on the high street and one hundreds of kilometres in the bush that relies on the fickleness of ‘Mother Nature’, there would have been no need for this article.
Pain, distress, trauma.
There can be few among us who have not witnessed the distress and trauma in the eyes, demeanour and behaviour of relations, friends and associates when they are confronted with the awful news that their creditors have appointed receiver managers.
They stumble and fall as they search for a quiet place to go through all the emotions that well up inside of them. Fear, resentment, shame, humiliation, panic, anger, rage, embarrassment and guilt. For far too many, it is more than they can endure and they withdraw from family and friends and the society in which they live.
Some have a breakdown from which they never really recover. Some, unable to cope, take their own lives.
Continue reading “The Scales of Justice are Broken in Rural Australia.”