Impact of bushfires for Farmland investments in Australia

The international media coverage of the Australian bushfires reached hysterical levels over summer. Essentially, everybody agrees the bushfires are caused by climate change and the situation will get worse in the future.

It is understandable as an investor in Australian farms you would be concerned with such a conformity of opinions expressed by the media.

We beg to differ. The objective facts can be found here:

Globally, the average temperature is rising. The trend during the last few years shows this. Australia is no exception. But the year 2019 has been a large outlier. The temperature in Australia has been much higher than what can be explained by the climate models. Year to year variation in Australia is much larger than for example in Europe. So, one has to assume that the high temperature of 2019 is a deviation from trend and more likely than not this will correct itself.

All our farms are dry land cropping. There is only one winter crop. Farmers sow in autumn and harvest in early summer. A slightly higher temperature during the winter months would not harm the crop as long as there is enough rainfall. It would only shorten the growing season and harvest would be a few days earlier.

The different climate models do not predict a change in Australian precipitation. The actual data shows rainfall has increased during the last few years. However, this average increase comes also with a huge year to year variation. Last year was indeed the driest year ever measured in Australia. Based on the existing data, one has to assume this is also an outlier and more likely than not, rainfall should revert to the mean.

On a global scale bushfire intensity is decreasing not increasing. Contrary to what one would expect from following the media. Also, in Australia it is not the worst bushfire season on record. During the years 1974/75 100 million hectares were burnt. This is ten times the area of the current fires. The years 1974/1975 were years with normal rainfall and much lower temperatures. Statistically, there is no correlation between temperatures and bushfires.

One theory put forward that might have exacerbated the bushfires is the reduction in prescribed burning over the last few years. This has mainly been due to the Green Party been opposed to prescribed burning in any form.

Aboriginals have burnt the Australian landscape for millennials. This tactic of burning the dry matter in forests before it reached dangerous levels, made sure fires were smaller and more regional. For ecologic reason (leaving habitats for animals) it was decided that prescribed burning should be reduced. This led to a massive build up of potential fuel in most of the national parks. This is the fuel, which is now burning in an uncontrollable way.

The fires are mostly in the large forests along the Great Dividing Range, or to the east of the range towards towards the coast. The Paringa farms are on the other side of the country in Western Australia. Our farms are in areas with less average rainfall. Forests in this area are smaller and not as dense. Due to lower rainfall in this region the fuel levels in these forests is much lower.

There are from time to times fires in the areas where our farms are situated, but these fires are much easier to control. Nevertheless, they can be devastating if your farm is affected by them. Fortunately, none of our farms has suffered any fire damage this year.

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