“Farmers are paying, on average, two-and-a-half times more in local council rates than other commercial businesses in rural and regional shires,” VFF president Peter Tuohey said.

“As it stands farmers are bearing an unfair share of the rates burden.

“The current local government funding system is simply unsustainable and we need to find a long-term solution.

"The reality is rural councils have had their funding cut by state and federal governments, past and present. Yet no one will take responsibility for finding a solution.”

Moyne Shire has proposed a rate hike of 5.75 per cent for 2015/16 while Corangamite has budgeted for a 5 per cent rise.

Inflation, measured by the Consumer Price Index, is running at a low 1.3 per cent and has not topped 3 per cent in the past three years.

Under new Andrews government rules, council rate rises will be limited to the inflation rate. Councils would have to apply for any higher increase and show good cause why it was necessary.

David Pullen, president of the VFF south-west branch said Corangamite and Moyne Shire rates were “spiraling out of control”.

“We’re extremely concerned that local councils costs, particularly labour costs, are out of control. This is reflected by councils increasing rates much higher than the inflation rate. Frankly,  we don’t get value for our rate dollar,” Mr Pullen said. 

Corangamite Shire mayor Chris O’Connor said the rates increase was in line with how the council has operated over the past three years.

He said some of the revenue raised would go towards debt repayments as the state government rate cap would restrict the council’s ability to make payments into the future.

Moyne Shire finance manager Craig Ralston said the proposed increase had been kept in line with the strategic resource plan the council adopted last year.

The VFF advocates the compulsory adoption of differential rates for farms and commercial businesses, designed to reflect the earning capacity of assets, rather  than their value.

Many councils operate a differential system, but Moyne Shire does not. Corangamite Shire applies farm rates at 94 per cent of the commercial rate.

Both Moyne and Corangamite shires are dominated by farm businesses, leaving the councils heavily dependent on them for revenue.

Urban regional councils, where farms make up a small part of total business numbers, usually apply much bigger differentials. 

Warrnambool City Council charges commercial businesses at 168 per cent of the base rate and farms at 56 per cent.

The VFF advocates a total revision of the rating system, with more direct federal and state contributions.

“An increase in GST, with the extra revenue going to councils is one option. We will be putting that to our members at our annual conference next month.”

Mr Tuohey said the VFF supported the capping of rate increases.

“It forces councils to be more responsible in how they spend money. Some have been a bit out of control.”