| SES undertook a research project for the Australian Government’s
Department of Transport and Regional Services (DOTARS) as part of
its examination of the impacts of the current drought “beyond
the farm gate”. The project used interviews conducted in April
2004 to assess the impact of the drought on non-farm businesses and
communities in two case study areas – Roma in Southwest Queensland
and Temora in Western NSW
The research found that the drought is having a major impact on
non-farm small businesses and communities in the two case study
areas.
Farmers and non-farm business operators interviewed reported that
they plan for a season or a season and half of poor returns, but
there were concerns that if the drought continued, financial resources
would be depleted and the consequences would suddenly become much
more severe – in a departure from the pattern of steady decline
observed to 2004.
The report proposes a model for interpreting the impact of drought
on non-farm businesses by taking account of two main drivers of
drought impact business:
1. Reliance on producers as customers; and
2. Extent of ‘essentialness’ in goods or services sold.
The interviews indicated that the line of business pursued by a
small business is crucial to the drought impact. As discretionary
buying slowed, capital purchases all but stopped (pending a more
certain future) and farm input purchases shrank to the essentials
needed to get ready for the next crop or sale. Small businesses
affected by these spending changes were seeing very significant
turnover and staff losses. The core non-farm business issues have
been loss of cashflow, extended credit provisions, loss of skilled
staff, and lack of ability to secure business finance.
The interviews indicated that the community impact stems from the
visibility of drought and the inability of people to end it, bringing
high levels of stress to individuals and families both on- and off-farm.
A core family impact is the extra labour required during drought
– carting water and feeding stock – and the interviews
found that labour is being supplied by the family rather than paid
contractors to keep costs down.
Individual stresses can be extreme during drought, and these can
permeate their way through a whole community. Unfortunately, one
of the ironies of drought is that a community’s capacity to
provide support is also at its weakest when the need is greatest.
Individuals profoundly affected by drought are seen as withdrawing
into their own small world, removing themselves from their usual
community building and community supporting activities – further
undermining a community’s ability to respond to the drought.
The report is available at: http://www.dotars.gov.au/regional/pub/2005-04-13_Beyond_the_Farm_Gate.aspx
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