FARMERS across Australia will be able to save thousands of dollars thanks to a cut in concessional farm finance interest rates from February 1 2017.

It is estimated the revised rates could deliver savings of up to $5900 over a year. The rate drops comes as part of the Coalition Government’s regular six-monthly review of concessional interest rates.

The interest rate for the Farm Finance Concessional Loans will drop from 3.55 percent to 3.03pc, while the Drought Concessional Loans rate will fall from 3.05pc to 2.53pc, and Drought Recovery and Dairy Recovery Concessional Loans rate will decrease from 2.66pc to 2.07pc.

The interest rate for the Coalition Government’s new Farm Business Concessional Loans Scheme, which began on November 1 2016, will remain at 2.47 per cent.

Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, said reduced concessional interest rates could save farmers with existing bank overdrafts and loans thousands of dollars.

“The Coalition Government has delivered on its commitment to back Australia’s farmers during tough times like drought and severe farmgate milk price cuts.

“For those farmers trying to recover from drought or the dairy cuts, this reduced interest rate means their decision to refinance using the government’s scheme will deliver further savings of up to $5,900 over a year—a substantial saving and real benefit to people,” Mr Joyce said.

“Our farmers contribute about $58 billion to our nation’s economy. Stronger farm businesses mean a stronger economy.

“Supporting viable farm businesses to better manage through drought and hardship is firmly in our national interest,” he said.

“So far, more than half a billion dollars in concessional loans have been approved to more than 1000 farm businesses nation-wide.”

Mr Joyce said the Coalition Government has also just launched the new $250 million Farm Business Concessional Loans scheme, which brings together the differing loans products, drought assistance concessional loans and dairy recovery concessional loans under a more flexible package.

“The government will be providing these loans at an initial variable concessional interest rate of 2.47 per cent for a maximum term of 10 years.

“Interest-only repayments are available for the first five years of the loan term, with principal and interest repayments for the next five years.

“Adjustments to the concessional interest rates are made in accordance with material changes to the Commonwealth bond rates.”

Mr Joyce said he knew of a farm business in Queensland that took out a $1 million Drought Concessional Loan and is now saving around $33,300 in interest a year, or $166,500 over the five-year loan term.

“Today’s announcement means that from 1 February 2017, that business will save a further $5,200 over a full year.”

Loan amounts are for up to 50pc of a farm business’ final debt position to a maximum of $1 million in total.

For more information regarding concessional loans, click here.

Source: Minister for Agriculture and Water Resources.