Background

Definition of exceptional circumstances

Exceptional circumstances (EC) events are rare and severe events that are outside those that a farmer could normally be expected to manage using responsible farm management strategies. Specifically, they are events that occur on average once every 20 to 25 years and have an impact on income for a prolonged period (e.g. greater than 12 months).

To be classified as an EC event, the event:

• must be rare and severe, that is, it must not have occurred more than once on average in every 20 to 25 years and must be a significant scale
• must result in a rare and severe downturn in farm income over a prolonged period of time (e.g. greater than 12 months)
• must not be predictable or part of a process of structural adjustment.

EC declaration process

State and territory governments are responsible for compiling and submitting EC applications to the Australian Government. Once an application is received, the Australian Government Minister for Agriculture, Fisheries and Forestry may refer it to the National Rural Advisory Council (NRAC) for assessment. NRAC is a skills-based independent advisory council to the Minister, and conducts a comprehensive assessment of the application against the agreed EC criteria, which may include an on-ground inspection.

On completion of its assessment, NRAC presents its recommendations to the Minister, who has responsibility, after consulting with the Australian Government, for declaring whether or not a particular area is experiencing EC. If a full EC declaration is announced, EC assistance is available to eligible farmers for up to two years.

• EC handbook - information on how an area becomes EC–declared
• more information on Drought Assistance

Review of EC declarations

NRAC reviews EC–declared areas before their expiry date to assess whether an extension to the declaration is warranted. The EC review criteria differ from the EC criteria and take in to consideration whether seasonal, agronomic and resource conditions have provided an opportunity for the majority of producers within the EC-declared area to begin to carry out typical farm management practices relevant to their enterprise type and production cycle.

As part of the review, NRAC assesses information from a number of sources, including analyses by the Australian Bureau of Agricultural and Resource Economics and Sciences, state and territory governments and local producers. Additionally NRAC may undertake an on-ground inspection of the area.

If NRAC assesses an area as no longer being in EC, and the Minister accepts the advice not to extend the declaration, assistance ceases on the date the declaration ends. If NRAC supports extending the declaration, and the Minister agrees, assistance continues until the new declaration end date.

Recent Developments

Closure of the EC Interest Rate Subsidy

On 27 April 2012, the Minister for Agriculture, Fisheries and Forestry, Senator the Hon. Joe Ludwig, announced that the EC Interest Rate Subsidy (ECIRS) would close on 30 June 2012. The move to end the ECIRS has been recommended by successive reviews of drought policy since 1997, including the Productivity Commission, which found the subsidy resulted in farm businesses being less responsive to drought conditions. The end of the subsidy has cleared the way for new arrangements that will help farmers better manage risk and prepare for challenges associated with drought, rather than the previous approach of waiting for a crisis before offering assistance.

Review of national drought arrangements and the WA Pilot

At the Primary Industries Ministerial Forum in Cairns on 29 February 2008, Ministers agreed that current approaches to drought and exceptional circumstances are no longer the most appropriate in the context of a changing climate. Ministers also agreed that drought policy needs to be improved to create an environment of self-reliance and preparedness, and encourage the adoption of appropriate climate change management practices.

In April 2008, the Minister for Agriculture, Fisheries and Forestry, the Hon. Tony Bourke MP, announced that the Australian Government would conduct a comprehensive national review of drought policy, through three separate investigations, to help prepare farmers and rural communities for a changing climate.

The review included:

• an economic assessment of drought support measures by the Productivity Commission
• an assessment by an expert panel of the social impacts of drought on farm families and rural communities
• a climatic assessment by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Bureau of Meteorology of the likely future climate patterns and the current exceptional circumstances standard of a one-in-20-to-25-year-event.

The Australian Government, in partnership with the Western Australian Government, conducted a pilot of drought reform measures in part of Western Australia. The pilot tested a package of new measures developed in response to the national review of drought policy. The measures were designed to move from a crisis management approach to risk management.

For more information about the pilot visit drought pilot or call the Drought and Farmer Assistance Hotline on 13 23 16.