Farmers pump $1 billion into Farm Management Deposits in four months

Sheep Central, July 28, 2015

AUSTRALIAN farmers have dumped more than $1 billion into Farm Management Deposits in four months this year to deposit a record $4.6 billion up to June 30 2015.

The $4.604 billion in FMD holdings at June 30 was the highest level of deposits since the programme began in 1999 and surpassing the previous high of $4.139 billion up to June 30 last year. The lowest level of holdings within the past 12 months was $3.533 billion at February 28 2015.

The Department of Agriculture said the increase in FMD holdings for June 2015 is consistent with the trend in FMD holdings generally observed each financial year, peaking in the June quarter.

Minister for Agriculture, Barnaby Joyce said today the high FMD uptake indicated how important the deposits were for Australian farmers, and why the Australian Government had committed to enhancing the scheme further as part of the Agricultural Competitiveness White Paper.

“FMDs allow farmers to put pre-tax income aside in good years to build up cash reserves for use in low income years,” Mr Joyce said.

“Having money set aside in an FMD to draw on in lean years can help farmers bring their businesses back to profitability when conditions improve.”

FMD loan offset use could save $150m a year

Mr Joyce said further improvements to the FMD Scheme would mean more farmers will use them and he encouraged banks to offer FMDs as loan offset accounts once the changes are made. The government would be consulting with organisations such as the Australian Bankers’ Association to establish how to implement the changes as efficiently as possible.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has estimated that if all FMD holdings are used to offset loans, the benefit to the farm sector in interest savings could be worth up to $150 million a year.

The FMD improvements proposed by the Federal Government to apply from July 1, 2016, include:

– Increasing the deposit limit from $400,000 to $800,000. This will deliver more flexibility to farming enterprises to manage income fluctuations;

– Re-establishing an ‘early access in drought’ provision, allowing farmers affected by drought to withdraw their FMDs within 12 months of deposit without losing their taxation benefit;

– Removing legislative restrictions preventing FMD accounts being used as a loan offset.

Farmers should shop around for best loan offset options

Mr Joyce encouraged farmers to shop around to find the best loan offset option for their farms and their families, given they need to hold an FMD and their loan with the same bank to take advantage of these changes.

“Essentially it works like a mortgage offset account for a home loan; farmers will be able to use the money in their FMDs to offset the amount borrowed,” he said.

“For example, if they have a $1 million loan, and they have $800,000 in FMDs, they will only be paying interest on the remaining $200,000.

“They will also get the tax concession if they hold their deposits for more than 12 months.”

FMD deposits reflect recent good seasons

NSW Farmers’ economic spokesman Peter Wilson said the high level of FMDs reflected a couple of good seasons and strong commodity prices that many farmers have experienced recently.

“It is also indicative that this policy is working and will in time increase the resilience of farmers in tough times.”

Mr Wilson said the level of FMDs varies across regions and commodities.

“However, we look forward to changes flagged in the Ag White Paper which  will make it easier for farmers to withdraw funds from FMDs in times of drought as well as enable them to use FMDs as an offset account.

“Doubling the maximum for FMDs and allowing more flexible use means farmers can better manage risk, which is great for the sustainability of farmers and the ag sector as a whole.”

More information is available at

Source: Department of Agriculture.



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  1. Yet more proof that Joyce’s failed low interest loans and drought relief has gone only to those that do not need it? Is this fellow the bankers and wealthy elites best friend whilst pretending to be otherwise? What about those farmers that are struggling? Analysis please on who has taken advantage of this and other schemes administered by Joyce? Does it include certain wealthy miner friends of Joyce? Has Joyce forgotten the farmer that shoots his livestock and then turns the gun on himself whilst courting the wealthy elite and miners? Too many unanswered questions, too much political spin. Detailed analysis please. Full names required in future for reader comments please Mary, as per our long-standing comments policy: Editor

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