Farmers | What to Look Out For When Assessing Economic Loss


By Kain Elsmore 


Claims for farmers / primary producers are inherently difficult and require an understanding of why the financial records look the way they do.

Generally speaking, the financial outcomes for farmers diverge from the reality of the situation leaving the person tasked with trying to reconcile the allegations of their client with an identifiable financial impact, scratching their heads.

Key Considerations

To try and assist, we have identified 8 key areas to consider in assessing loss for your farming clients:

  • Business or hobby

Is your client running an operation with a view to a profit or merely a hobby in relation to which they are able to “set-off” tax losses against their other income.  This distinction is important when determining whether your client has a legitimate claim for damages.

  • The legitimacy of tax deductions claimed

Primary producers are provided with an array of legitimate taxation deductions which “skew” the financial records.  An understanding of these schemes / deductions, and the ability to normalise the financial records is necessary to present a “true” reflection of the earnings derived.

  • Climate

As with all claims, an understanding of external factors which may have impacted the financial records is imperative in isolating the impact of an injury.

  • Personal living expenses

Given that, generally, farmers reside on the asset used to generate their income, the financial records often include expenses with both a personal / business component to them.  These expenses include mortgage payments, rates, utilities, insurances etc.

  • The return

The return to a farmer identified in their financial records, generally relates to their “income return”.  However, the ongoing maintenance / improvement of farming land / operations may give rise to a “capital return” which is unable to be quantified until the farms disposal.  That is, even without the obvious identification of a net “income return”, the provision of farming labour provides value toward the “capital return”.

  • The farm as an asset

In circumstances when the farm is sold due to the injury (ie. the farmer is deceased or severely injured), it may be initially assumed that the client is “better off” as the return on the sale proceeds exceeds the apparent “income return”.  It should be remembered that (i) the farm would have been sold at some point in any event (ie. the sale as a result of the injury has merely been accelerated); and (ii) the farm may have been sold on a “firesale” basis (ie. the sale as a result of the injury may have been at a price which was less than the “but for” sale in the future”.

  • Retirement age

Whilst, ordinarily, it may be assumed that a client would have worked until the “ordinary” age at which the age pension is accessible, around 67 years, in the case of farmers, this assumption may be inappropriate.  In our experience, and given that farms are often “passed on” through the family, limiting calculations to a “rule of thumb” retirement age may be contrary to the actual intentions of your client.

  • Replacement labour approach

Quite often the only appropriate method of assessing the loss of a farmer is based on the assumed cost of replacing their contribution to the farm.  This approach should be exercised with a cautious view as to how the replacement of an owner at the commercial cost of an employed farmer, effectively deals with the potential loss of intellectual skill / experience.


To sum up:

DON’T take the financial records of farmers on face value.

DO consider the taxation concessions available / climatic (and other external) factors impacting the financial records.

DON’T apply the “rule of thumb” retirement age.

DON’T hesitate to pick up the phone and call us and we will be happy to assist!

How Can Vincents Help?

With more than 30 years hands-on experience in the assessment of economic loss in personal injuries claims, the team at Vincents can help you accurately assess your client’s notional earnings.

Want to know more?

If you would like to know more about the issues raised in this article, please contact Forensic Services Director Kain Elsmore.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.



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