Elders boss Mark Allison slams federal government for failing rural Australia
Mark Allison has slammed the Albanese government for failing to tackle the perfect storm of challenges facing farmers across rural Australia.
Elders boss Mark Allison has slammed the federal government for failing to tackle the perfect storm of economic challenges weighing on farmers across rural and regional Australia.
Mr Allison said the combination of unseasonable weather conditions, rising interest rates, cost pressures and government policies like the ban on live sheep exports were all adding to the gloom being felt across Australia’s agriculture industry, creating an environment unseen in his 40 years in the industry.
Asked whether last week’s federal budget had done anything to brighten his outlook, Mr Allison described it instead as a failed opportunity to address the concerns facing the industry.
“If I presented that as a budget to my board, I think it would be thrown out as just talk,” he said.
“It seems to me that the priorities are all wrong. We’ve got a bunch of economic issues we need to address, we’ve got a bunch of social issues we need to address, and it just feels to me the priorities are wrong.
“And I think we’re seeing that in some of the sentiment in regional and rural Australia, where people in the real world find it difficult to understand.”
Mr Allison said he wasn’t seeking hand-outs for the industry, but rather wanted the government to focus on creating an economic environment that would “allow the country to thrive”.
Elders, one of the country’s largest agribusinesses which provides farmers with everything from livestock trading services to farm supplies, technical advice, financial services and insurance, has not been immune to the challenges facing Australia’s agriculture sector.
On Monday the company cut its interim dividend to 18c, down from 23c in the previous corresponding period, after reporting an $11.6m net profit in the first half, down from $48.8m.
Underlying earnings before interest and taxes for the six months to March were down 54 per cent to $38.4m, with sales falling 19 per cent to $1.3bn.
The company blamed challenging seasonal conditions, cautious client sentiment, softening crop input prices and lower livestock prices for the result, but said trading in the second quarter improved following widespread rainfall across many regions in eastern and southern Australia.
It reaffirmed its full-year underlying EBIT guidance of $120m-$140m, which it flagged in April after the Bureau of Meteorology’s declaration of an El Nino weather event hit farmer sentiment but ultimately failed to materialise.
Mr Allison said recent dry spells across much of South Australia and parts of Victoria and Western Australia were a worry for farmers in those regions, adding to the broader economic concerns that have continued to emerge.
“It’s an odd combination, and I haven’t seen it through my time – 40 years,” he said.
“Particularly on the (El Nino) weather forecast – that really spooked many people, particularly in northern Australia, where they got rid of livestock.
“But then you’ve got the other economic uncertainty around interest rates, around the implications of other policy settings that make it difficult for regional and rural Australia. “We’ve seen the live (sheep) exports issue in the west and concern in northern Australia around that being catapulted into a cattle issue, when the reality is that the animal welfare standards in live export markets are world-class and leading world standards in a number of areas.
“The fluctuation of input prices, where we had a lot of crop chemicals and fertiliser skyrocketing off some of the geopolitical issues in Ukraine and Russia – it seems like there are more factors at play than there have been for many years.”
For Elders, Mr Allison said he expected improved trading conditions in the second half, as sentiment continued to improve following a return to average seasonal conditions and a brighter outlook for winter crop and livestock production.
The company completed 10 acquisitions during the first half before finalising a deal earlier this month to take over Knight Frank’s business in Tasmania.
Mr Allison said there were an additional 15 targets in the company’s acquisition pipeline, with a focus on adding to its real estate services offering.
Mr Allison ditched his retirement plans in June last year, after the Elders board convinced him to stay on and hoisted his fixed salary by more than $400,000 while throwing in a $1m bonus if he stays on until 2025.
While a proposal to award Mr Allison an additional 180,000 shares via two tranches of service rights was rejected at the company’s annual meeting in December, Elders said on Monday that those payments would now be made in cash, due to an obligation under Mr Allison’s employment arrangements to provide compensation of an equivalent value.
The share entitlement would be worth more than $1.5m based on Monday’s share price. Elders shares were trading 2.7 per cent higher on Monday at $8.43.
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