As we all know many Australian’s farmers are doing it tough, especially at the moment. It is a well-known fact many of these farms end up having to take loans out over the year in order to keep running. This means they are banking on the fact they are going to have a good year and if they don’t they may have to sell up and move on from farming entirely. So, is debt a problem in our farming sector?

I believe that yes, it is. Do I know the solution to fix it? Unfortunately no.

Farming debt in Australia has increased by almost 75% in the past decade. In 2004 our farmers had about $40.3 billion in debt, in 2014 this debt was now worth $70 billion.  That’s a $30 billion increase which I am not sure our farmers can absorb.

In fact, 70% of farm debt is held by 12% of farmers. This is a concerning figure, based on this information it is clear that while some of our farmers are coping but there is a portion that is unable to make ends meet and have to go into debt to support their properties. Although part of this debt is certainly held by larger companies who can easily afford the repayment I am confident part of this debt would also be held by the everyday farmer.

We also know about 6% of farms are estimated to be at high risk, which is to mean they are at high risk of not being able to pay back their debts. Whilst this has declined since the 1990’s where it was at 10.3% this is still a concerning figure that must be addressed by the farmers themselves, their creditors and the Federal Government.

Whilst the Federal Government has put up its hand to help out farmers they are not willing to take on this $70 billion worth of debt. However, there are a number of programs or schemes out there to assist farmers who are doing it tough.

The Farm Debt Mediation Scheme has been implemented to try and assist farmers with their debt. The scheme is a structured negotiation process in which a mediator assists both the farmer and the creditor to reach agreement on the present arrangements and future conduct of financial relations between them. Mediation is a simple, voluntary and confidential process that is quick and affordable. Unfortunately this process will still leave the farmer at the mercy of his creditor as this is not a legally binding process.

The Queensland Rural Adjustment Authority (QRAA) runs a number of co-lending programs to assist farmers for their financial needs in QLD. There are also a number of other programs in other states to assist farmers in duress to reach their financial needs, but I do not believe this is enough.

Do our farms have a bleak financial outlook? Yes they do. Their sector is so dependent on weather events that their crop or stock can easily been killed or damaged affecting them for years to come financially. I do not know what solution as a nation we can put forward to assist farmers going through troubled times, but I do know that more needs to be done to support them.


Rasad Merchant CPA
Strategy and Business Development Manager & Secretary of the Personal Insolvency Professionals Association (PIPA)

Rasad brings over 8 years’ experience working in the insolvency sector to Debt Cutter, where he is dedicated to achieving peak business performance. With a background as both a trusted business advisor, and as a business owner, Rasad uses his foresight to strategically manage business growth and opportunities.