Five banks pass on rate cuts to farmers, June Monitor shows

After two Reserve Bank of Australia (RBA) interest rate cuts in two months and repeated calls from the farm sector to reduce agribusiness loan rates, five financial lenders have passed on some cuts to their agribusiness customers, the June Agribusiness Loan Monitor has found. Released today by the National Farmers’ Federation (NFF), the June Monitor shows that four banks, ANZ, Bank West, Bendigo Bank and Suncorp, have reduced both their term loan and overdraft rates by between 0.06 percent and 0.37 percent this month, while one bank, Westpac, has reduced its overdraft rate by 0.50 percent. Chair of the NFF Economics Committee, John McKillop, has welcomed the reductions and has called on the other lenders to follow suit. “After a very slow response from the banks to last month’s RBA interest rate announcement, with the Monitor showing only one bank had made any movement in their agricultural loans at all, it is pleasing to see five banks passing on some of the latest rate cuts to farmers,” Mr McKillop said. “Of course, there is room for the banks to do much more, as none of the reductions equal the 75 basis points cut by the RBA over the past two months. But, compared to last month, the June Monitor shows a marked improvement in rate cuts and its very pleasing to see farmers and agricultural borrowers finally starting to see some of the benefits,” Mr McKillop said. Mr McKillop’s comments come as agricultural commodity prices and the Australian dollar continue to fluctuate, making headline news. “Financially, it’s a very uncertain time for farmers at the moment. At the beginning of June we heard that global agricultural commodities had fallen to a three year low, due in part to the continued instability of global financial markets. “At the same time, while farmers have been benefiting from the softening of the Australian dollar over the past month, renewed confidence following this month’s surprise economic growth data and the news yesterday that Greece is likely to stay within the eurozone has pushed the dollar back up above parity – not good news for our export reliant sector. “With low commodity prices and a high Australian dollar squeezing the farm bottom line, farmers are looking to the banks for some positive financial news in the form of interest rate cuts,” Mr McKillop said. June 2012 marks 12 months since the NFF introduced the Agribusiness Loan Monitor to provide greater transparency for farmers around agribusiness loan rates. The June Monitor is available http://www.nff.org.au/publications.html#cat_2119[here], along with previous editions.