NFF urges banks to pass rate relief on to farmers

The National Farmers’ Federation (NFF) has welcomed today’s decision by the Reserve Bank of Australia (RBA) to cut interest rates by 0.25 percent, bringing the official cash rate to a record low of 2.75 percent. NFF President Duncan Fraser said the rate cut comes at an ideal time for farmers, who in many areas are facing a ‘perfect storm’ caused by the high Australian dollar, increased input costs, softening commodity prices, a return to dry conditions and the cost of accessing finance. “While farmers in many parts of Australia are enjoying good seasonal conditions, in other areas, a return to dry seasons combined with these other pressures is causing undue concern to the agricultural sector,” Mr Fraser said. “And agriculture is not alone. In making the decision to cut rates today, the RBA has acknowledged the impact that the high Australian dollar and weakening commodity prices are having on the wider Australian economy – and, a week out from the Federal Budget, the Government’s revenue. “We urge the rural lending sector to pass this rate cut on in full to our farmers. Just last week we released the NFF’s April Agribusiness Loan Monitor, which shows that the banks have not been passing on the RBA’s interest rate cuts in full. “Since July 2012, the official cash rate has fallen by 0.50 percent, and yet the banks have each passed on somewhere between 0.15 and 0.40 percent of these cuts. And given that in recent days, two of the major banks have each announced record six monthly profits, we believe they have the capacity to do so. “Today, we call on all rural financial lenders to pass the 0.25 percent rate cut on in full,” Mr Fraser said. The NFF’s April Loan Monitor is available http://www.nff.org.au/publications.html#cat_2119[here]. The Monitor is compiled each month by leading money market monitor Canstar and published by the NFF as a tool for all Australian farmers.