Agri rates on hold while overseas debt forces focus on trade

The National Farmers’ Federation (NFF) has today released the latest Agribusiness Loan Monitor, which shows that agribusiness rates have again remained steady against the RBA official cash rate during August. The RBA interest rate has remained at 4.75 percent for the ninth consecutive month, and agribusiness rates have followed suite, with base rates remaining on hold at an average of 9.04 percent. NFF Economics Committee Chair John McKillop says that while interest rates and agribusiness loan rates remain on hold in Australia, the policy response to escalating overseas Government debt levels may be to the benefit of Australian farmers. “Debt levels in the US and the EU continue to rise, bringing with them the potential to push the cost of credit higher. The need to reign in this spending has prompted calls for these countries to implement austerity measures,” Mr McKillop said. “The impact of this could be a win for Australian farmers, as attention turns to cutting funding to trade distorting farm support policies like the US Farm Bill and the EU Common Agricultural Policy in order to make savings. “The need to reform these subsidy programs is something the NFF has long advocated for, as they distort international trade in agriculture. Australian farmers are heavily exposed to global markets with extremely low levels of Government support, meaning that our farmers compete on an entirely unlevel playing field. “In the past, NFF’s reform efforts have encountered enormous political resistance by our major competitors, but now it seems that the financial reality may be too strong for this reform to be avoided. “Any cuts to these farm programs would send a positive message that the US and EU are finally prepared to reform their agricultural sectors, and in doing so, hopefully helping to break the deadlock in the Doha Round of WTO trade negotiations. “And such cuts would also help address the rising cost of credit and the threat of a flow through rise in commercial interest rates in Australia,” Mr McKillop said. Mr McKillop’s comments come as NFF President Jock Laurie and CEO Matt Linnegar met with the head of the WTO, Director-General Pascal Lamy, in Sydney and Canberra last week. The August NFF Agribusiness Loan Monitor is available below and via the NFF http://www.nff.org.au/publications.html#cat_2119[Publications page].