HARVEST: Rain will help Southern Downs farmers get out of hard financial times, but surviving drought in the future will require a new approach to financing.
HARVEST: Rain will help Southern Downs farmers get out of hard financial times, but surviving drought in the future will require a new approach to financing. Linda Mantova

One cost farmers are overlooking and why that must change

DROUGHT could help trigger a major overhaul in on-farm financial management, according to a Warwick dairy farmer who said historical methods of accounting would not sustain farmers in the modern-day economy.

Bill Lester said it was common for farmers to overlook personal expenses when planning their finances and as a result many would not get financial assistance early on.

"Things like food and groceries are a small cost compared with other farming expenses," he said.

"People run their equity down to nothing and then they realise there is trouble, but if they sought assistance earlier they would be in a better position to recover after the drought.

"If farmers accounted for their personal living costs first, I believe they would be more inclined to seek assistance before it became too late.

Mr Lester said it was hard to change old practices but doing so was essential for sustainability in the future.

"Farming has long been a way of life where you take the good seasons and you hang on through the bad," he said.

"But today the economy is such that it makes it very difficult to hang on through the bad because the expenses are so much higher."

Member for Maranoa David Littleproud said farmers' financial literacy had improved substantially since the advent of GST.

"But the reality is there is always new things to be learnt from any drought and disaster," he said.

Mr Lester said the drought had brought a focus to farm household accounting.

"That has to happen, it is necessary for farming in this day and age," he said. "Technology makes it easier to cope with drought but we don't have the economy to support it."