AUSTRALIAN BANKERS’ ASSOCIATION SAYS AUSTRALIA’S CORE BREEDING STOCK MUST BE MAINTAINED DESPITE DEVASTATING DROUGHT Sydney, 15 December, 2002: The Australian Bankers’ Association says it is imperative that Australia’s core breeding stock is maintained despite this devastating drought otherwise there could be long term consequences for the Australian agricultural sector and the economy. David Bell, Chief Executive of the Australian Bankers’ Association (ABA), said: “Many livestock producers have been proactive managing the drought by strategically reducing stock numbers ahead of the decline in feed availability.” “However, banks don't want to see the situation where farmers are forced to run down their core breeding stock because it would take a number of years to rebuild the genetic base of livestock enterprises once the drought breaks.” “Australia’s livestock producers are innovative and employ hi-tech methods to improve the genetic base of their breeding stock. This core capital investment needs to be maintained.” “Banks have been providing additional carry on finance to assist farmers hold onto essential breeding stock and purchase the required fodder during the drought. This is in association with interest rate subsidies provided by the Federal Government in the Drought Support Package which will provide flexible support to assist livestock producers maintain the genetic base of their livestock enterprises and help cropping farmers to plant again once the drought breaks.” Banks have been providing our rural communities with special consideration and understanding during this difficult period. The banks’ drought relief packages provide practical help by giving immediate financial relief to those in most need of assistance and improve prospects for maintaining a viable farming business. Mr Bell said: “Banks recognise that drought is a part of the normal business cycle of farming. For those bank customers receiving the Federal Government’s interest rate subsidies, banks have not increased credit risk margins on loans to reflect the short term impact that the drought is having on farm incomes.” The ABA welcomes the Federal Government’s Drought Support Package because the funding will help our rural communities endure the worst drought on record. Representatives from ABA member banks are looking forward to discussing some of these issues with Deputy Prime Minister John Anderson at tomorrow’s Sydney meeting on drought, as well as the implementation of the Federal Government’s generous drought package. With the worsening drought tightening its grip on many rural communities, bank agribusiness managers will draw their customers’ attention to help that is available for livestock producers making decisions about feeding their animals in drought conditions. Stock Plan, produced by the New South Wales Department of Agriculture, is an example of the tools that are available to help farmers make decisions about feeding livestock in drought conditions, based on the conditions of animals and pasture, and the production target for stock. Mr Bell said: “During drought, it is important that farmers constantly assess and revise their situation and it is vital that they make production decisions based on long-term and short-term objectives.” “Setting production objectives for all classes of stock on the property is a pre-requisite to successful drought management. For example, decisions need to be made on whether farmers sell stock to generate cash flow, maintain them until conditions improve or feed a production ration to reach a market outcome.” Bank agribusiness managers have been actively contacting their customers to explain that banks manage the impact of drought on farmers, businesses and individuals on a case-by-case basis, reflecting varying impacts and options available to individual customers.  The financial position of individual customers varies and this determines the options that are available. Some of key elements of the drought relief packages on offer include: Provision of 'carry on finance' to viable farming operations to keep businesses running and to enable crops to be sown and livestock programs to recommence; Affected businesses with existing loans can request loan restructuring without incurring the usual bank establishment fees; Affected credit card customers may ask to defer their next credit card payment and/or an emergency credit limit increase; Waiving of early withdrawal penalties for affected customers wishing to withdraw term deposits; Suspension of home loan repayment for agreed time periods. Notes for editors: To obtain a copy of Stock Plan – please visit NSW Agriculture’s website: www.agric.nsw.gov.au For further information contact: Heather Wellard ABA PR Phone: 02 8298 0411 Mobile: 0409 830 439 ENDS