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Farm Management Deposits forecast to tickle $7 billion mark

Sheep Central, April 30, 2018

NAB Agribusiness general manager Khan Horne

NEARLY a billion dollars will be added to the Farm Management Deposit accounts of Australian farmers this financial year, National Australia Bank agribusiness general manager Khan Horne predicted today.

He is predicting FMD deposits will reach almost $7 billion in 2017-18, but producers will use the reserves to recover from drought in the next financial year.

In June 2017, FMDs hit $6.09 billion in Australia, with record-breaking year-on-year growth of 17 percent, as producers utilised the recently doubled cap of $800,000 per account holder.

“The incredible growth in FMD savings shows that farmers are planning ahead to manage their cashflow in challenging years by putting aside FMDs when they can,” Mr Horne said.

“Across other industries, there has been good growth in funds put aside by sheep-beef and sheep producers, as well as pig, crop and intensive livestock account holders.

“In saying that, we are expecting to see funds drawn down after the end of this tax year as some producers use their reserves to help manage the current dry conditions in many parts of the country,” he said.

Mixed sheep, grain and beef farmers have added almost half a billion dollars to their Farm Management Deposit accounts in the past three years, Mr Horne said.

But beef producers are outperforming other industries in adding to FMDs, with the national balance expected to break another record this financial year.

FMDs allow eligible producers to set aside pre-tax income in good years, up to a total limit of $800 000, which is then available to draw down in future years when they need it. Khan Horne

“Beef is leading the way in FMD savings off the back of high prices over the past year or so,” Mr Horne said.

“Thanks to continuing high cattle prices, there’s been a 50 per cent increase in funds put into FMDs by beef producers in the past three years, at close to half a billion dollars over this period.

“This compares with an average 25pc increase for other industries.”

“The eastern states are the success story with Queensland and New South Wales outperforming other states across all segments,” Mr Horne said.

Click here to see the graph for FMD volumes by industry.

Click here to see the graph for FMD volumes by state.

Source: NAB.

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