AgForce Queensland has welcomed the move by NAB to offer more support and financial flexibility for its rural customers, particularly drought-affected farmers, and encouraged other major rural lenders to follow suit.
NAB CEO Andrew Thorburn announced the NAB would allow farmers to offset their Farm Management Deposits against their loans and will no longer charge penalty interest payments on farmers who fall into default on their loans.
AgForce CEO Michael Guerin said Farm Management Deposits allowed farmers to set aside money from their pre-tax income during good years to later use during tough times.
“AgForce first sought the introduction of offsets for Farm Management Deposits during the Agricultural Competitiveness White Paper process in 2014, so we very much welcome this week’s announcement from Australia’s largest agri-lender, NAB,” he said.
“Offsetting FMDs against other farm loans will enable producers to save on interest costs while also growing their resilience to business risks, including drought or market downturns.
“NAB’s decision to no longer charge higher default interest rates on drought-affected farmers who are unable to make their loan repayments is also very welcome.
“It is counterproductive and unfair for farmers who are struggling to meet repayments to then be hit by even higher charges, which often contributes to foreclosure actions being taken by the bank.
“We congratulate NAB on the announcements they have made and urge other rural lenders to follow their lead.”
Mr Guerin said AgForce was optimistic the current banking Royal Commission would lead to real action to deliver fair and affordable financing options for Queensland broadacre farmers.
“The banking Royal Commission provides an opportunity to shine a spotlight on the poor practices of the past, while also looking at how the banking sector can work better with farmers to attract more investment and grow their businesses into the future,” he said.
This week’s announcement by NAB follows a recent drought roundtable chaired by Federal Agriculture Minister David Littleproud and attended by the National Farmers’ Federation, state farming organisations, including AgForce, and banking representatives.