Calls for increase in Farm Household Allowance assets threshold
SA Dairyfarmers' Association president Robert Brokenshire believes a significant increase is needed in the Farm Household Allowance assets threshold, and it also needs to account for Consumer Price Index rises each year. File picture
Hallmarks of modern day farming like astronomical land values, and increasing machinery prices, are sparking calls for an increase in the income and assets threshold that determines whether farmers are eligible for the Farm Household Allowance.
The FHA is, put simply, a federal government payment for farming families in financial hardship.
The allowance's eligibility criteria have been in the spotlight again, following the SA government's second drought support package that offered Emergency Services Levy and vehicle registration relief to those on the FHA.
That link has been pitched as a way to help the most financially vulnerable farmers first, but some policy experts and farming group leaders believe the FHA's eligibility criteria needs a long overdue overhaul in any case.
Established by the federal government, the asset threshold sits at $5.5 million, which may seen generous to the layperson, but includes farmland, farm machinery, livestock and crops, houses (excluding a principal residence on less than two hectares), home contents, cash and all financial accounts including farm management deposits - all essential in producing food.
SA Dairyfarmers' Association chair Robert Brokenshire says a significant increase is needed, which should then be adjusted to rises in the Consumer Price Index every year.
Mr Brokenshire believes the cap is restricting the number of worthy farmers that could be accessing the FHA in a time of drought, and it is a threshold that needs addressing.
"I'm intending to push it through Primary Producers SA and to the National Farmers Federation to make it an issue," he said.
"It needs to be changed because the original intent of the payment for when it's a natural disaster or drought and a farming family haven't got any cashflow for household living, isn't weakened by capital growth and no increase in the cap."
From a dairy perspective, Mr Brokenshire estimated most farms would be worth $9-$13m when taking into account farmland, machinery and livestock.
"A good dairy herd can be valued at $3000-$4000 a head so if you have 400 cattle that's $1.2-$1.6m for them plus your young stock," he said.
"We've also gone through solid years of capital growth of agricultural land in SA.
"Machinery has gone through the roof - a baler that not long ago cost you $35,000 now costs you $85,000. A 150 horsepower tractor that cost $100,000 a few years ago costs you $200,000 today.
"Modern farming has gone up in asset value just like housing has.
"Just as it is difficult for people to buy a home now, it's equally as difficult for people to buy a farm."
While Mr Brokenshire did not wish to put a number on a new cap, he said a significant increase was needed along with an annual CPI adjustment.
The current number of South Australians accessing the FHA is 820 - the highest in any state or territory in Australia. Many are thought to be grapegrowers recovering from a product glut, with lower acreages and less machinery assets due to using subcontractors for harvest.
Murray Bridge farmer and agricultural policy expert Richard Reedy believes the current number on the FHA is only scratching the surface of the demand in SA and the cap could easily be moved to as high as $20m.
He said the combination of land values, even in more marginal areas, machinery costs of $1 million for a header in some instances, and "hundreds of thousands" for a tractor could put many modest grain growing enterprises over the threshold very quickly.
Federal Agriculture Minister Julie Collins was asked for her stance on a potential increase to the FHA threshold.
A government spokesperson said it was important to note that an applicant's debts were subtracted from the value of their assets.
"Farmers with equity of more than $5.5m are not eligible for government income support, as they would likely have access to other options to support themselves during a downturn in farm income, for example through commercial lending opportunities," their statement said.
The spokesperson said there were also a number of other support options for farmers doing it tough, such as "drawing down on their Farm Management Deposit holdings, accessing a concessional loan (at 5.18 per cent) via the Regional Investment Corporation, and seeking support from the Rural Financial Counselling Service".
The spokesperson also said a re-elected Albanese Labor Government would extend the instant asset write-off to $20,000 per item.
"Small businesses with less than $10m turnover - including farms - will continue to be able to deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by mid-2026."
The federal Coalition has been contacted for comment.
FHA link to bill relief a "practical way" of providing support
The South Australian government says offering Emergency Services Levy and commercial vehicle registration rebates to those on the FHA represented a practical way of helping farmers in financial hardship, whilst minimising the information required from applicants.
A spokesperson said other relief would be available to farmers not on the FHA, including rural financial counselling and $1500 grants for essential costs.
A 50 per cent concession for light vehicle registration for primary producers will also continue to be provided by the state government.
Opposition spokesperson for Primary Industries Nicola Centofanti says her party is suggesting the implementation of a SA Drought Hardship Register where farmers could be "referred by an organisation such as Rural Business Support".
"Drought impact could be validated through a brief verification process, not a full income/assets audit, and the register could then be used to unlock rebates such as ESL and vehicle registration rebates," she said.
"We know that we are dealing with a crippling drought but drought is not the only thing that our primary producers are dealing with and so having a simple, streamlined process that is not onerous and full of red tape but still ensures accountability is critical."