Agribusiness hits record lending milestone

Farming sector lending among Aussie banks has reached over $131 billion for the first time over the year to September 2024. According to the Australian Banking Association (ABA), this is 9.4 per cent higher than the year prior.

Supporting our agriculture sector is crucial for areas such as the economy, food supply, and employment. Lenders play an important role in keeping farming strong through agribusiness loans.

“There is no doubt that Aussie farmers are the workhorses of our economy,” said ABA CEO Anna Bligh.

“Australian banks are deeply invested in the success of Australian agribusinesses. Banks will always be there with our farmers during the good times and through the tougher times.”

Lending to the farming sector has been steadily increasing, with agribusiness loans increasing by 20 per cent between July 2019 and February 2022. Then in 2022–23, it increased by a further 6 per cent.

“Whether it be loans for livestock and new machinery or hardship assistance in times of natural disasters, Australian banks will continue to stand side-by-side with our agricultural producers,” said Bligh.

“A strong farming sector helps drive Australia’s economic growth. It’s critical that farmers have access to the credit they need to grow and innovate.

“As the farming sector evolves, banks will continue to collaborate with the sector, governments and industry stakeholders to ensure product and service offerings support the needs of Australian agriculture long into the future.”

The Department of Agriculture, Fisheries and Forestry (DAFF) said that agribusiness lending is crucial for the sector.

“Debt is an important source of funds for farmers to develop their farm business and for ongoing working capital. Information on trends in the use of debt financing provides context for understanding longer term changes in farm financial performance and the drivers of future productivity growth,” said the DAFF.

“Debt is used by farmers for a range of purposes, including purchasing and developing land, purchasing farm buildings, vehicles and equipment, and providing ongoing working capital. Aggregate farm business debt has increased substantially in recent years, but average farm business equity ratios have remained steady because of strong increases in land values. Recent increases in farm incomes have also improved farmers’ ability to service debt in the short term. As a consequence, farm incomes are currently less vulnerable to rising interest rates than they were in the 1990s or early 2000s.

“Farmers access finance from a wide range of providers. APRA data shows that farmers collectively accessed 101 different finance providers during 2022–23, including small, locally owned and operated credit unions, the finance arms of major vehicle and farm-machinery suppliers, and the major retail and commercial banks.”

Agribusiness can be a lucrative and rewarding path for brokers, helping diversify offerings. According to research from the end of 2022, NAB is Australia’s most trusted lender in the space.

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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