WESTERN Australian farmers added $146 million to their farm management deposits (FMDs) in the 12 months to March, in contrast to New South Wales and Queensland farmers who drew down on their accounts.
Analysis by National Australia Bank (NAB) of its own and Department of Agriculture and Water Resources data indicated significantly higher rates of withdrawals in drought-affected States made up the roughly $40 million national FMD draw down in the year to March.
According to NAB, WA farmers led deposits, ahead of Victorian and Tasmanian farmers, in the FMD scheme which allows primary producers to set aside pre-tax income during high income years and to hold up to $800,000 which can then be used to help manage cash flows in low income years.
NSW recorded the highest net drawdown on FMDs of $83 million, NAB said.
Following a historic high of $6.6 billion in June 2018, the data revealed the national balance held in FMDs was down to $5.6b in March this year, it said.
NAB agribusiness customer executive Khan Horne said last Thursday the significant deviation in FMD activity between States represented fluctuating seasonal conditions across the country.
"The continued drawdown and generally flat deposits in NSW reflects the prolonged periods of drought there, while a marginal winter cropping season in WA allowed continued deposits by producers," Mr Horne said.
"This is the first time since 2014 that we've seen States break away from the national trend, with NSW trending to lower net deposits from December 2019 to March 2020, while WA and Victoria trended towards increased net deposits over the same period."
Although peaks in FMD holdings are the lowest they have been for six years, Mr Horne said it was encouraging to see drawdowns representing only a small percentage of the total balance held.
"This moderation in withdrawals is particularly pleasing within the context of such a severe period of drought and confirms that our primary producers are very adept at managing their cash flow and using the FMD scheme to their advantage," Mr Horne said.
"Looking ahead, with the 2019-20 winter cropping season shaping up well, it will be interesting to see how growers use FMDs if production estimates are realised.
"We expect to see a continuation in FMD drawdowns in the near term as primary producers look to restock and buy seed, fertiliser and chemicals for planting following recent rainfall in drought-affected areas across the Eastern States.
"The long-term effects of COVID-19 are also unknown and it will be interesting to see what impact the pandemic has on FMD withdrawals and deposits over the coming period."
