The Tasmanian Farmers and Graziers Association (TFGA) this afternoon welcomed the 25-point cut in interest rates, saying it would help farmers with their costs at a time when the Australian dollar was dead against them.
TFGA chief executive Jan Davis said that, like all Australians, farmers were affected by the cost of money. Today’s interest rate cut to three percent meant cash rates should be down to their lowest levels since the global financial crisis in April 2009.
“It is good news for farmers who work on very thin margins. It also means less pressure on the Australian dollar, which is currently sitting at 104 US cents after reaching highs of 110 US cents last year.
“We know that every one per cent appreciation in the Australian dollar pushes our farm income down by around $220 million in raw terms due to our high reliance on our export markets, so a weakening Australian dollar and an interest rate cut combined spell good news for the sector.
The National Farmers Federation’s Agribusiness Loan Monitor tracks the movements of financial lender’s agribusiness loans against the official interest rate, will show which banks, if any, follow the RBA’s lead this month. The November Loan Monitor showed that eight banks have made some reduction in their rates since the October RBA rate cut. However, only one bank – BankWest Agribusiness – passed on the full 25 basis points, and then only to their agricultural overdraft customers.
“Of course, a rate cut doesn’t amount to a hill of beans until the banks pass on the rate cuts to farmers by way of cheaper interest rates,” she said. “We shall be watching them all, like hawks.”
Details will be available on the NFF’s Agribusiness Loan Monitor:
http://www.nff.org.au/
from mid-December.
TFGA chief executive Jan Davis
