Federal Budget 2017-18

Infrastructure and funding for farmers but a missed opportunity on food waste

Australian agriculture and food production have endured tough conditions in recent years, but there was a lot for both industries to be happy about in this year’s Federal Budget.

Inland Rail

The $8.4 billion Melbourne to Brisbane Inland Rail line was unquestionably the most significant announcement for the sector.

On completion in 2025, it is estimated to save 10 hours off the existing Melbourne to Brisbane rail freight journey, making it extremely competitive with road transport.  This will provide more flexibility for agricultural producers to get their products to export markets at reduced costs.

Accelerated Depreciation

On another positive note, the 12-month extension of the accelerated depreciation provisions for capital expenditure under $20,000 provides an opportunity for producers and manufacturers to continue to invest in their businesses.

It will apply to businesses with a turnover of less than $10 million – up from the previous limit of $2 million.

Concessional Loans

Farmers battling drought will also benefit from the announcement of a $4.5 billion Regional Investment Corporation.

The corporation will function as a one-stop shop that issues concessional drought loans for farmers, including a $2 billion National Water Infrastructure loan facility to create new dams, weirs and irrigation pipelines. The new corporation will also administer money for drought recovery and farm finance loan schemes.

The corporation enables the Federal Government to bypass the states and delivering funds for drought relief direct to primary producers. This should eliminate red tape and get funds distributed quickly to those in need.

Livestock Global Assurance Program

The budget also delivered more than $2 million a year for four years to implement the new Livestock Global Assurance Program.

It builds on the current Exporter Supply Chain Assurance System and aims to improve industry compliance with stringent animal welfare regulatory requirements.  This should further strengthen Australia’s reputation as a quality export trader.

Work Visa Levy

Unfortunately, it wasn’t all good news for the agriculture, and food and beverage industries.

The introduction of an annual temporary work visa levy of $1200 or $1800 per worker per year — and one-off permanent skilled visa levy of $3000 or $5000 — is a real negative.  Farming, and food and beverage processing all rely heavily on foreign labour.  Not only will this be an additional cost, but it may threaten the ability of producers to source essential labour altogether.

Food Waste

The budget was also silent on tackling food waste, a major issue for the industry.

It is estimated that between 20 and 40 percent of all food produced is either disposed of at the farm or production site, or through consumers throwing out unused purchases.

There are a number of potential avenues to reducing food waste including reviewing retail standards for what is considered to be acceptable and educating consumers as to the real cost of waste.  Given the extraordinary impact food waste reform could have for the efficiency of the sector, it should be at the top of the Government’s hit list for the 2018 budget.