Businesses in regional towns starting to feel ripple effect of drought
BUSINESS is drying up west of the Great Dividing Range, as costs soar and cash-poor farmers tighten their belts. It comes as an alarming new survery reveals the ripple effect the drought is having on businesses in regional communities.
NSW
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BUSINESS is drying up west of the Great Dividing Range, as costs soar and cash-poor farmers tighten their belts.
The NSW Business Chamber surveyed more than 1000 businesses in regional NSW on how they are being impacted by the worst drought in more than 110 years.
A staggering 84 per cent said they had been negatively affected, while another 70 per cent said their local economy was struggling.
Almost half of those surveyed said current drought conditions were “far more severe” than previous droughts, with four in five businesses revealing their cash flow had already been affected.
Wagga Wagga butcher James McNaughton has been forced to increase the price of lamb loin chops by $6 per kilogram in the last two months, from $16.95 per kilo to $22.95, and similarly a lamb leg suitable for a roast has gone up $3 from $9.95 to $12.95.
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The price rises have come about because of a glut of skinny sheep only good for pet and plant food, while there’s a shortage of fat lambs with enough meat on the bones to sell in a butcher shop because the cost of grain has soared.
Last week saw lamb price records tumble at Forbes saleyards on Tuesday where sheep went for $260, which was eclipsed on Thursday at Wagga Wagga where sheep went for $276.20.
Mr McNaughton can’t discount his meat any further, but even still “customers are refusing to pay for it”.
It’s the same story for chicken, beef and pork, which require grain to fatten the animals.
“I’m paying the highest prices for meat I have ever paid in 10 years as a butcher,” Mr McNaughton said.
The butcher has already decided to make 30 per cent fewer Christmas hams, predicting shoppers won’t have the money to pay for them.
The survey asked businesses in all parts of NSW including the Far West and Orana, New England and North West, the Hunter, Central West, Riverina, Murray and Capital Region about the impact of the drought and how prepared they were for it.
Industries covered include accommodation and food services, agriculture, forestry and fishing, construction, financial and insurance services, manufacturing, and retail and wholesale trade.
One in three revealed the viability of their businesses was at risk, while two-thirds said they would need to start scaling back investment and reduce capital.
Affected businesses said they may have to start reducing staff numbers, shedding an average of 1.5 employees.
NSW Business Chamber chief executive Stephen Cartwright said the impact of the drought on primary producers “needs to be front of mind”, but secondary industries are also suffering.
“The drought is also affecting regional businesses at all part of the supply chain,” Mr Cartwright said.
He said revenue is down in industries including retailers, manufacturers, construction and tourism.
“Cash flow is a huge concern with 80 per cent of surveyed businesses indicating their cash flow had been adversely impacted.
“Australians are known for their generosity and the importance of a fair go,” Mr Cartwright said.
“These communities provide us with the essentials so it only right that we all chip in to assist them through this difficult period.”
Mr Cartwright said the chamber is calling for a raft of initiatives to be introduced to help struggling regional businesses — including a “drought-focused business concierge service” to help connect non-farm businesses with government programs.
He said the Australian Taxation Office and Revenue NSW should provide clear policy statements “on the availability of tailored payment plans” to help those struggling businesses to meet their tax obligations, while both state and federal governments should provide local councils with funding to provide land rate relief for drought-affected businesses.