All banks cut agribusiness loan rates, July Monitor shows

Agribusiness loan rates have fallen across the board over the past month, with all financial lenders passing on interest rate cuts, the July Agribusiness Loan Monitor shows. The Monitor, released today by the National Farmers’ Federation (NFF), shows that each of the seven lenders have reduced rates by between 0.20 and 0.44 percent for their term loans, and between 0.20 and 0.40 percent for their overdraft rates. Chair of the NFF Economics Committee, John McKillop, said that this is the first time since the introduction of the Monitor in June 2011, and since the Reserve Bank of Australia began dropping rates in November 2011, that all the financial lenders had passed on rate cuts to the agribusiness sector. “Today’s Monitor is an important milestone: the recognition of the fact that for the first time since this tool was introduced by the NFF, all the banks have passed rate cuts to agribusinesses,” Mr McKillop said. “These rate cuts come at a very relevant time for our farmers, with the Australian dollar again on the rise, putting additional pressure on the export-reliant farming sector. “Australian farmers are also feeling the effects of what’s happening overseas in terms of agricultural production and commodity prices, particularly the impacts of the US drought and heatwave,” Mr McKillop said. “The drought has ravaged much of the corn and soybean crops in the US, with the expected yields drastically downgraded – and, given that the US corn crop is a key driver of price globally, the spiralling cost of corn overseas is impacting on farmers here, with the domestic wheat price rallying as a result. “This brings with it mixed result for Australian farmers: grain farmers will be feeling the benefit of rising prices, while those farmers who rely on grains as a feed source, like beef, chicken and pork farmers, will be feeling the pressure of rising costs. “And, while we certainly don’t wish drought on any farmer or community, there may also be an opportunity for Australian farmers to help fill the void of crops decimated by the US drought. “What the current situation certainly goes to show is that Australian farmers are very exposed to the volatility of international commodity markets. This is exactly why it is essential that any good news on a domestic financial front, such as a cut in RBA official interest rates, are passed on by the lenders to the agribusiness sector, as we have finally seen across the board this month,” Mr McKillop said. The Agribusiness Loan Monitor is compiled by leading money market monitor Canstar and published by the NFF. The July Monitor is available http://www.nff.org.au/publications.html#cat_2119[here], along with all previous editions.