Farm Management Deposit scheme reaches record high

Beef Central, 28/07/2015

The Farm Management Deposits (FMD) Scheme has reached its highest level of deposits since the program began in 1999, with $4.6 billion held in accounts as of June 30, 2015.

Federal agriculture minister Barnaby Joyce said the figure highlights the importance of FMDs to Australian farmers and underlines why the Australian Government had committed to enhancing the scheme as part of the Agricultural Competitiveness White Paper.

“FMDs allow farmers to put pre-tax income aside in good years to build up cash reserves for use in low income years,” Minister Joyce said.

“Having money set aside in an FMD to draw on in lean years can help farmers bring their businesses back to profitability when conditions improve.

“Further improvements to the FMD Scheme mean more farmers will use them and in turn this helps to ensure a strong future for Australian agriculture and more reliable farmgate returns.”

The improvements include, from 1 July 2016:

  • Increasing the deposit limit from $400,000 to $800,000. This will deliver more flexibility to farming enterprises to manage income fluctuations.
  • Re-establishing an ‘early access in drought’ provision, allowing farmers affected by drought to withdraw their FMDs within 12 months of deposit without losing their taxation benefit.
  • Removing legislative restrictions preventing FMD accounts being used as a loan offset.

Minister Joyce said he encourages banks to offer FMDs as loan offset accounts once the changes are made and the government would be consulting with organisations such as the Australian Bankers’ Association to establish how to implement the changes as efficiently as possible.

“I encourage farmers to shop around to find the best option for their farms and their families, given they need to hold an FMD and their loan with the same bank to take advantage of these changes,” Minister Joyce said.

“Essentially it works like a mortgage offset account for a home loan; farmers will be able to use the money in their FMDs to offset the amount borrowed. For example, if they have a $1 million loan, and they have $800,000 in FMDs, they will only be paying interest on the remaining $200,000. They will also get the tax concession if they hold their deposits for more than 12 months.”

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has estimated that, if all FMD holdings are used to offset loans, the benefit to the farm sector in interest savings could be worth up to $150 million a year.

Source: Federal Minister for Agriculture. More information is available at



Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Beef Central's news headlines emailed to you -