ABARES Reports 6% Rise in Farm Lending for 2023-24

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has revealed that aggregate lending to the farm sector increased by 6% for the 2023-24 fiscal year. This growth has been attributed to consistent capital investment and prevailing confidence within the Australian agricultural sector.

According to ABARES Executive Director Jared Greenville, “The aggregate value of outstanding loans grew from $123.6 billion on June 30, 2023, to $131.4 billion by June 30, 2024.” He highlighted that Western Australia and South Australia experienced the most significant percentage increases in farm lending, at 12% and 7% respectively.

Uneven Distribution of Debt

Despite the overall increase in lending across all states and territories, Dr. Greenville noted that the distribution of debt remains inconsistent among farms. “In 2023–24, just 5% of broadacre and dairy farms accounted for a staggering 52% of the aggregate loan value in these sectors,” he explained. “Conversely, the remaining 48% of the debt was shouldered by 45% of farms.”

Interestingly, around 50% of broadacre and dairy farms reported carrying little to no debt during the same period.

Interest Coverage Ratio Insights

The affordability of farm debt is quantified by what is known as the average interest coverage ratio, which reflects the average percentage of gross cash income consumed by interest payments. Dr. Greenville highlighted that higher interest rates in 2022-23 and 2023-24 resulted in an uptick in this ratio, reaching 22% for broadacre and dairy farms during 2023-24.

“This marks the highest level seen in a decade, although it remains significantly lower than the peak of over 50% recorded in 2006-07,” he added.

Further Information

The complete report and accompanying dashboard can be found on the ABARES website. The data provided includes detailed insights into the total value of agricultural loans, arrears data, and information on debt mediation and foreclosures.