Interest rates on loans across the Australian Government’s concessional loan schemes for farm businesses are set to fall on August 1.

Under the Agricultural Competitiveness White Paper, the government is providing $250 million a year for the next 11 years in low interest drought loans to give farmers surety of access to more affordable credit during difficult periods.

Interest rates on loans currently under the Drought and Drought Recovery concessional loans schemes will fall to 3.05 and 2.71 per cent respectively.

Farm businesses that have an existing Farm Finance concessional loan will see their interest rate fall to 3.55 per cent.

“Given current commercial interest rates in the range of 5–7 percent, these rates are equivalent or better than a 50 percent interest rate subsidy,” Federal agriculture minister Barnaby Joyce said.

Mr Joyce said the Australian Government was working to deliver responsive, effective and genuine assistance where it is needed on the ground.

“The falling interest rates are good news for farmers who already have loans under these schemes, or who are considering applying,” he said.

“The government provides farmers with access to finance at lower interest rates to help them get through tough periods, like drought, and so they can rebuild their businesses once the drought breaks.

“Agriculture is a pillar of our economy. We need to ensure that our farmers remain strong, profitable and resilient in the face of difficult conditions, such as severe drought, which are beyond the control of any business.

“This year’s Budget delivers more than $400 million worth of support for farmers and rural communities—much of which is targeted at those impacted by drought.”

The Australian Government reviews the interest rate applied to the Farm Finance and Drought concessional loans schemes on a six-monthly basis. Adjustments to the concessional interest rates are made in accordance with material changes to the Commonwealth five-year bond rate.

The Drought Concessional Loans Scheme interest rate will be reduced from 3.84 per cent to 3.05 per cent. The Drought Recovery Concessional Loans interest rate will fall from 3.21 per cent to 2.71 per cent. The interest rate for existing Farm Finance Concessional Loans will drop from 4.34 per cent to 3.55 per cent.

Applications for the Farm Finance Concessional Loans Scheme closed on 30 June, but farmers can still access low interest loans under the Drought and Drought Recovery concessional loans schemes.

Source: Minister for Agriculture. Farmers interested in a concessional loan are encouraged not to self-assess their eligibility but to find out more from the delivery agency in their state. Contact details are provided on the Department of Agriculture website. Further information on a range of Australian Government assistance for farmers, farm businesses and rural communities is available at agriculture.gov.au/assistance.