AN EXTRA $100 million in new low interest concessional loans aimed to relieve pressure on drought-hit producers has been announced today by Agriculture Minister Barnaby Joyce.
Loans of up to $1 million will be made available at 3.21 per cent over a 10-year period. Drought Recovery Concessional Loans will build on the existing Farm Finance and Drought Concessional Loans Schemes, under which loans have already been approved to 286 farm businesses in Queensland and NSW, valued at over $150 million.
The existing concessional loans scheme - set at 4pc over five years - has been criticised for lengthy application processes and too short a time frame.
Shadow Agriculture Minister and spokesperson for Labor's Country Caucus Joel Fitzgibbon said the new measures fell short of what farmers need.
"I desperately wanted to welcome the government’s latest drought package... sadly, Barnaby Joyce hasn’t given me that opportunity," he said.
"Christmas is still looking bleak for drought-affected farming families."
Mr Fitzgibbon said drought recovery loans will do nothing for farmers while the drought continues and there was "no new money", with funds reallocated from the Farm Finance package set up by the previous Labor government.
Mr Joyce said the new loan settings take into account the devastating impact that one-in-50 or one-in-100 year droughts have on farm businesses by offering longer loan terms and lower interest rates.
“In September, Treasurer Joe Hockey and I visited western NSW and south-west Queensland to see first-hand how devastating drought can be,” Mr Joyce said.
“We listened to the concerns of producers. This government is committed to delivering the assistance needed on the ground and we are determined to stand by farmers in good times and bad.”
In June, Prime Minister Tony Abbott signed off on $200 million to deliver low interest concessional loans to battling farmers in NSW and Queensland, as part of a $320m national drought assistance package announced in February, of which $280m was dedicated to concessional loans.
Mr Abbott toured drought-ravaged regions of Australia with Mr Joyce in February and declared the ongoing drought a natural disaster.
Both the assistance and loans schemes have been criticised, with ongoing bureaucratic stalemates between the Commonwealth and State agencies - especially in Western Australia - holding up delivery.
Mr Joyce defended the Coalition's schemes, saying more than 4200 farmers are now better able to pay their household bills as a result of the Coalition government’s drought package to date.
“When we came to office, not only was there no targeted drought assistance in place, there were only eight Farm Finance concessional loans approved and only 367 farming families receiving income support on the basis of financial hardship," he said.
NSW Nationals MP Mark Coulton said the portion of his Parkes electorate “now experiencing the worst drought in living memory” was a productive part of NSW.
But the concessional loans scheme announced today would enable those farmers to take the opportunity to return to full production, when the drought breaks and rain arrives.
“The Walgett shire in a normal year would be expected to produce 1 million tonnes of grain and large amounts of fibre, wool and cotton, and beef and lamb,” he said.
“A lot of these farmers out there in western NSW are used to dealing with drought.
“They can handle a missed income for 12 months - or even 18 months - but going into their third year of no income, I would defy any business to have a scheme that can prepare themselves to manage through that.
“This announcement today of the lower interest loans over a longer period of time has answered a call from the farmers in my electorate.
“They have been concerned about their long-term relationships with their financiers and I believe this package addresses that concern.”
Mr Coulton said many of those farmers had sold their stock at a reduced rate in a drought depressed market, but would now be able to access funds to purchase stock to get back into full production and also to purchase diesel and grain to grow a crop.
LNP MP Bruce Scott has also been calling for greater government support in his Queensland electorate of Maranoa. He said the new loans package recognised both the worsening drought situation and also those producers in the northern cattle zone impacted by the former Labor government's decision to suspend the export of live cattle to Indonesia in 2011.
He said the scheme was “targeted” and also gave farmers a chance of recovery by accessing loans over 10 years at lower interest rates.
“I think those elements of it will give people certainty and security about looking to the future, which is what we want as a government as we look at Northern Australia, as we look at the white paper for agriculture coming out,” he said.
Mr Joyce said farmers dealing with issues pertaining to the live cattle ban would be considered eligible if they are experiencing a one-in-20 year drought, or one in 10-year drought, if they have had consignments of cattle into the live trade in two of the past three years.
Drought concessional loans can be used for debt restructuring, operating expenses and drought recovery and preparedness activities. Applicants can use loan funds to contribute to the cost of activities to recover from and prepare for future drought.
The existing Farm Finance Concessional Loans Scheme is not specific to a particular reason for hardship, while the assistance available under the Drought Concessional Loans Scheme is targeted to those farm businesses that have a financial need as a direct result of drought conditions.
The average level of debt increased by 4pc in south-west Queensland and 12pc in north-west NSW during 2013–14, according to a new report commissioned by Mr Joyce.
In the northern Queensland gulf region, the proportion of borrowers more than 90 days in arrears servicing their bank loan increased from 1.9pc at 30 June 2012 to 3.4pc at 30 June 2014.
At the national level, 3pc of the total value of the agriculture, fisheries and forestry sector loans was more than 90 days in arrears at 30 June 2013, compared to an average of approximately 2pc in all other business sectors.