$1 billion drought package for hard-hit farmers and rural communities

Beef Central, 07/11/2019

DROUGHT-hit farmers, small businesses and rural towns are set for a $1 billion cash injection to keep stock fed and watered, keep businesses open, keep locals in work and pump funds into local economies.

As part of a $1 billion drought stimulus package announced earlier today, the Federal Government plans to overhaul the Regional Investment Corporation’s funding rules. Under the plan, loans of up to $2 million under the RIC would be offered to farmers under a reconfigured 10-year payback schedule.

Key features of the new package are:

  • Making new and existing drought loans for farmers interest-free for two years, so they purchase fodder, pay for freight and pay their farm hands. Years three to five will be interest only payment and years six to ten will be interest and principal. The current scheme prescribes that the first five years are interest only payments, and interest and principal payments for the balance of the loan term
  • A new program for small businesses dependent on agriculture with loans worth up to $500,000 that can be used to pay staff, buy equipment and refinance. It follows the same new payment scheme as the Drought Loans for farmers
  • $10 million to support schools facing financial hardship as a result of ongoing drought conditions, including fee concessions for boarding students

The loans would be available to farmers to provide feed, water, freight and stock for their businesses, or anything that might keep their operations going.

The Prime Minister said the Coalition Government’s next step of measures to combat the drought’s impact was ready to flow.

“We are stepping up our drought response to meet the increasing needs as the drought’s effects also step up,” the Prime Minister said.

“Since the budget we have already committed an additional $355 million to step up our drought response. Today’s announcement triples this to more than $1 billion since the election, as well as more than $1 billion in new interest free loans, to see people through.”

“This is money into the pockets of all those farmers and graziers who know they have a future, but are currently struggling to keep their operations running as the crippling effects of this drought continue to bite that we’ve heard from out on the ground. They are backing themselves and we are backing them to make it through to the better days that will be ahead.

Mr Morrison said it was not only farmers doing it tough in drought. “Our next step in drought support also has an eye squarely on those communities feeling the strain as work dries up and spending in local stores slows down,” he said.

“There is no silver bullet to this drought. Each time we introduce further help we listen, we learn and we adjust our response because we know each community has different needs and priorities that need the resources and cooperation of every level of government.”

Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack said the Government’s latest initiatives would deliver an extra $709 million worth of direct support.

“Communities across Australia are suffering the effects of the prolonged dry spell and today’s announcement is the next step in the measures to help ease the burden of the drought,” Mr McCormack said.

“This suite of measures go to the heart of what matters to these communities. From small businesses to primary producers, we are working with communities to take the pressure off one of the worst droughts in history.

“Not only is the Government continuing to respond as the drought progresses, but we are working on measures to assist in the recovery when the rains come, which includes the Government’s billion dollar investment in water infrastructure.”

By redirecting $200 million from the Building Better Regions Fund into drought communities and an extra $139 million into the Roads to Recovery initiative, the government plans to gettlocal projects and infrastructure work underway to keep finance flowing, trades in work and money rolling through local stores.

Agriculture minister Bridget McKenzie said a new loans program for small businesses and making existing drought loans interest free for two years would deliver immediate support for everything from buying fodder to transporting stock and agisting cattle, through to paying staff and purchasing new equipment.

The Regional Investment Corporation’s mandate sets its interest rate just to cover administration and borrowing costs.

“These loans mean farmers and small business owners can do what they need to, right now at zero cost,” Minister McKenzie said.

“Farmers will not have to pay a cent for the next two years and we’ll keep assessing the program if the drought runs longer than that to ensure repayments are affordable.

“With $200 million worth of loans committed already, we estimate the new small business program and the changes to the Drought Loans for farms will see around $1.2 billion issued over the next three years that they can put to their priorities.”

Water Resources, Drought and Rural Finance Minister David Littleproud said as the drought escalates, so did the government’s response.

“The package will boost local jobs and respond to individual community needs,” he said.

“We’ve had strong demand on the Drought Communities Extension Program and we’re extending it to six new areas. On top of the $1 million we’ve delivered to 122 councils we’ll make another $1 million available for those still in need.

The government has also set up a $50 million fund for council projects in drought-hit communities for things like community hall renovations and playground upgrades.

“This will boost rural economies with more jobs and more business for regional suppliers like the local hardware store,” he said.

Irrigated fodder plan

Minister Littleproud said the Federal and South Australian Governments had also struck a deal to secure up to 100 gigalitres of water for farmers to grow fodder, silage and pasture at a discounted rate.

That amount of water would produce up to 120,000 tonnes of feed for animals on farms in drought, he said.

“This will help farmers maintain their breeding stock during the drought so when it breaks farmers can recover faster.”

Minister Littleproud said the Government had also released the Drought Response, Resilience and Preparedness Plan. The plan drew on the Drought Co-ordinator Major General Stephen Day’s report and the Government’s response, which was also released today.

Further information on the support available for drought-affected farms and communities and how to access it is available at


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  1. SHIRLEY BASTIAN, 11/11/2019

    I am hearing from people on the land that accessing this money
    is almost if not impossible – the younger farmers may be better equipped to fill in the pages and pages of info required – but what about the older generation who really have spent 40 years or more on the land … is anyone thinking about them ?

  2. Brad Bellinger, 08/11/2019

    I congratulate the Morrison government for helping us .The release of 100 gigalitres of water is a wonderful initiative.
    We have been hit very hard in the New England and relying on fodder supplies from the south to keep our cows and ewes alive.
    Can fodder subsidies be considered as a matter of urgency. MalcolmFraser did this in the 81/82 drought.

  3. Will Robinson, 07/11/2019

    Residing in Canberra itself, Australia has one of the most internationally rated, highly qualified and practically experienced scientists (formally of the CSIRO) at its disposal in Professor Walter Jehne. We can now see why the late Stephen Hawking’s concern about the world was “that persons in position of power will ignore scientists and the science” is indeed well founded? Harnessing Walter’s all embracing solutions to the problems at ground or soil level appears to be such a simple and obvious step to take. Perhaps we need Sir Michael Jeffrey (the Australian Soil Gentleman) to give the “persons in position of power” a gentle nudge to afford Walter the recognition to at least show us the way forward? Pretty simple really.

  4. Andrew Dunlop, 07/11/2019

    One of the problems with any form of subsidy is that the funds end up in the pockets of those most powerful in the supply chain, the retailers, in this case the all powerful supermarket duopoly. Of course having producers leave the industry is not the answer, breaking the power of the supermarket duopoly and getting a fair price for producers product would allow producers to put money away for the inevitable hard times. While we focus on the 4 major banks’ bad behaviour, the focus and the heat is OFF the monopolistic behaviour of the supermarkets and as a consequence, they are laughing “ALL THE WAY TO THE BANK”. There should be a supermarket Royal Commission to investigate market power, bullying and bad behaviour in the supply chains. A fair price is what farmers need, not subsidies in bad times.
    The other thing needed is encouragement to plan for the increasingly frequently expected bad times brought about by climate change. Subsidies for capital works such as on farm water storage, fodder conservation, pasture improvement with more drought and heat resistant pasture species. This is long term planning that governments are rarely good at. Lets expect another severe drought, soon, and plan for it with government support. This type of support is different from a subsidy that subsidizes production.

  5. Stuart Leahy, 07/11/2019

    Thank you Scomo. One additional and far superior option is to reintroduce Interest Subsidies. Many droughted producers will not go into more debt and therefore receive no benefit as they are already financed to uncomfortable levels. An Interest Subsidy would circumvent this. It was popular when introduced although the paperwork I have been told was horrendous. Unfortunately a small number of influential landowners lobbied successfully for its removal. For some reason they were listened too. It’s time to bring it back.

    • Grant Piper, 07/11/2019

      It was rorted and unfair, so was removed and not before time. People were buying new property with the interest subsidy, and a farmer on one side of a road would qualify while his neighbour did not. Whatever system is devised, it must treat all farmers equally, not un-reward those who have done the right things in the past, under the same clamatic conditions as their neighbours, and managed to put money away and pay down debt in the good times. Then they are discriminated against and ‘don’t qualify’ for the subsidy. Effectively rewards poor performers.

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