Delungra EC Application

Introduction

On 18 August 2010, the New South Wales Government submitted an exceptional circumstances (EC) application for the Delungra area. The application sought assistance for an EC event covering the 12 month period that occurred from May 2009 to April 2010.

The EC application was referred to the National Rural Advisory Council (NRAC) for independent advice on 23 August 2010.

On 11 October 2010, the New South Wales Government requested that the Evans Parish be included as part of the Delungra EC area. The adjustment to the Delungra boundary was referred to NRAC on 21 October 2010.

On 29 October 2010, the Australian Government announced that Interim Income Support was available to eligible farmers and small business operators within the Delungra EC application area.

NRAC inspected the area on 5–6 October 2010.

What are the EC criteria?

All EC applications are assessed against three criteria:

1. The event must be rare and severe. A rare event is one that occurs on average once in every 20 to 25 years. It must also affect a significant proportion of farm businesses in the application area.

2. The effects of the event must result in a rare and severe downturn in farm income over a prolonged period. The impact should typically extend beyond 12 months, as it is reasonable to expect the majority of farmers to manage one year of difficult seasonal conditions.

3. The event must not be predictable or part of a process of structural adjustment.

How has NRAC concluded that the EC criteria have not been met?

The first part of the EC criteria is about rainfall. NRAC relies on Bureau of Meteorology (BoM) data to assess rainfall, because BoM maintains quality controlled official climate records dating back to the 1900s.

NRAC found that rainfall over the 12 month event period was severely deficient and met the first criterion of a ‘rare and a severe, one in 20 to 25 year event’.

However, NRAC concluded that the evidence provided in the application could not substantiate the claims against the second criterion that the event led to a rare and severe downturn in farm income over a prolonged period.

While NRAC acknowledged that seasonal conditions were poor during the event period, it was the council’s view that the case that the event led to a rare and severe impact on farm income over a prolonged period (more than one year) had not been established.

NRAC noted that parts of the proposed area were covered by previous EC declarations until 30 April 2009 and 15 June 2009. NRAC also noted that immediately after the end of the event period, the area received average to extremely high rainfall from May to September 2010. Producers told NRAC during their 5 – 6 October 2010 on-ground inspection they were bringing agisted livestock back and looking to increase livestock numbers.

NRAC considered that the event was not predictable or part of a process of structural adjustment.

Background

On 24 November 2010, the Australian Government announced it had accepted the recommendation of the National Rural Advisory Council that the proposed Delungra EC application area not be EC declared.

The Delungra area covers approximately 270,000 hectares incorporating the main townships of Delungra and Inverell on the Northern Tablelands and Northern Slopes of New South Wales.

NRAC assessed the application against the EC criteria using advice from the Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences, data from the Bureau of Meteorology, feedback from producers and information from the New South Wales Department of Industry and Investment.