Farm debt and rural finance options are consistent themes of discussion within agriculture. With debt funding continuing to be an important source of finance for on-farm investments and the maintenance of working capital, the relationship between the banks and agriculture has never been more entrenched.
This is particularly evident in the recently released 2019 Queensland Rural Debt Survey. According to the report, a total of 18,232 borrowers owe a cumulative debt of $19.10 billion, a figure 10.75 per cent higher than the 2017 survey, and one that does not include other forms of debt such as unpaid utility bills through to lines of credit with local rural and farm suppliers.
The beef industry represents 55.89 per cent of the total rural debt in 2019, the highest of the state’s agricultural industries, though proportional to the size of the industry in Queensland. This is followed by the grains industry at 6.71 per cent, grain and grazing at 6.27 per cent, sugar at 5.8 per cent and cotton at 5.78 per cent, with the remaining 19.56 per cent owed by other industries. The Western Downs and Central Highlands region of Queensland has the highest rate of rural debt, though partly due to the industry, size and nature of activity carried out.
Assistance and support are available from the Rural Financial Counselling Service who can help develop and implement plans to improve farmers’ financial situations and refer clients to Legal Aid Queensland if legal advice, negotiations and farm debt mediations are required. The Queensland Farmers’ Federation is calling on the state government to extend its financial support for these services and provide improved access to financial and legal advice for farmers and primary producers across the state following the release of the 2019 survey.
As farm businesses are capital intensive, often asset rich and have limited options for alternative sources of finance, it’s imperative that farmers receive the best financial advice and assistance during times of difficulty and, in some cases, legal advice as well. Particularly while at a farm level, margins continue to be squeezed and profitability is increasingly being challenged with more farm businesses expected to face financial instability in the future.