Lending rates firm amidst global volatility

Beef Central, 24/08/2011


The National Farmers Federation’s latest Agribusiness Loan Monitor shows that agribusiness rates have again remained steady against the RBA official cash rate during August.

The RBA interest rate has remained at 4.75 percent for the ninth consecutive month, and agribusiness rates have followed-suit, with base rates remaining on hold at an average of 9.04pc.

NFF economics committee chair John McKillop said while interest rates and agribusiness loan rates remained on hold in Australia, the policy response to escalating overseas Government debt levels might be to the benefit of Australian farmers and graziers.

“Debt levels in the US and the EU continue to rise, bringing with them the potential to push the cost of credit higher. The need to rein-in this spending has prompted calls for these countries to implement austerity measures,” Mr McKillop said in a statement issued today.

The impact of this could be a win for Australian farmers, as attention turns to cutting funding to trade-distorting farm support policies like the US Farm Bill and the EU Common Agricultural Policy in order to make savings.

“The need to reform these subsidy programs is something the NFF has long advocated for, as they distort international trade in agriculture,” Mr McKillop said.

“Australian primary producers are heavily exposed to global markets with extremely low levels of Government support, meaning that they compete on an entirely unlevel playing field.”

“In the past, NFF’s reform efforts have encountered enormous political resistance by our major competitors, but now it seems that the financial reality may be too strong for this reform to be avoided.”

Any cuts to these farm programs would send a positive message that the US and EU were finally prepared to reform their agricultural sectors, and in doing so, hopefully helping to break the deadlock in the Doha Round of WTO trade negotiations.

“And such cuts would also help address the rising cost of credit and the threat of a flow-through rise in commercial interest rates in Australia,” Mr McKillop said.

His comments came soon after NFF president Jock Laurie and chief executive Matt Linnegar met with the head of the World Trade Organisation, director-general Pascal Lamy, in Sydney and Canberra last week.


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