Guy Salvidge has noted his upcoming Apocalyptic Summer as being the only post-apocalyptic novel set in the Western Australian (WA) Wheatbelt. I always like to take statements that include "all" or "only" to task, but although I have found a few close calls, at the moment I would have to say he is correct. Granted that's a little like someone in Nova Scotia complaining that they don't have any apocalyptic tomes written about them. It's all about population and author location. Whoops: except Nova Scotia does have at least one apocalyptic tome to its name, and so does Vancouver now.
It looks like reality (as in real life) is giving him a helping hand. Australians are facing a big reset as their lands devalue, and loans are scheduled to reset. Commercial loans in the Anglo-Saxon world typically have a short duration, and normally roll over on a regular basis. A roll over is looking difficult for many.
Farmers nationwide in serious trouble
Matthew Cranston, Australian Financial Review, 29 April 2013 (hat tip: Macrobusiness via NC)
At least 80 significant farming operations across Australia worth more than $1 million each are in receivership or some form of distress, with more likely to fold due to high costs, depleted income and sliding land values...
Farmers due to revalue their property under loan requirements are facing significant cuts in value which could see their loan-to-value ratios blow out. Under many loan contracts, if a certain loan-to-value ratio is breached, or if debt serviceability is impaired, the lender can apply harsh penalties of 3 per cent or more on each loan....
Ernst & Young administrator Justin Walsh said agricultural property values increased from year to year until they reached a level which was “simply unsustainable”.
“This was fuelled by huge debt loads being carried by farming enterprises across the sector. Around three years ago the year on year increases in properly prices stopped and since then values have fallen dramatically.
“What this means is that anyone who has bought into farming land over the five years before 2010 now probably has a negative equity position.
“When you couple this with the strength of the Australian dollar over a long period, farming in Australia faces a period of unprecedented challenge.
“Many farms are simply not viable with current debt loads,” he said.
Note that the author of the above piece is focusing on Queensland which is on the opposite side of the (very large) country from WA. So I went looking for WA news. I found it but the news was different. It was worse:
WA wheat farmers hit hard
Tim Binsted, Stock and Land, 25 March 2013
A COLLAPSE in confidence among Western Australia's drought-plagued wheat farmers has driven property transactions to a virtual standstill in the region, pushing valuers back to fundamentals.
Severe drought and frosts have hit the wheat belt hard, seeing a flood of properties come up for sale in a band stretching from Merredin, 250 kilometres east of Perth, to Salmon Gums, 110km north of Esperance.
David Avel, the rural division manager of valuer Heron Todd White in WA, told The Australian Financial Review there were simply too many farms on the market.
"Historically they may have split up and sold the farm to the neighbours, but they're not willing to do that now. It's extremely difficult times and if you're looking to buy land at the moment, you've got your pick."
It goes on to note that there are reports of farmers walking off the land, and land values "tanking." It includes a number of people saying that it is the drought stricken regions that are primarily affected, but doesn't explain why there is no sales data from non-drought regions if it is only price points you are looking for.
The note on the Australian Dollar being strong is probably somewhat true, but export agriculture, an industry that has a relatively small number of people involved in a large amount of export, is often one of its own worst enemies.
All of which goes to illustrate the odd world we live in. Fuel oil is getting harder to extract, but the prices have been going down. Food is getting dearer to the worlds growing population, but farmers are going broke.
As credit overreachs, you get collapse, and deflation. There appear to be limits to how far an over populated, resource poor world can inflate-finance its way to a higher, or at least equal plateau of economic results. Possibly we will have to do with less.