Sydney, 12 October, 2006: The Australian Bankers’ Association (ABA) said the banking sector recognises the seriousness of this drought and will continue supporting viable farmers.

The ABA has noted comments made on Tuesday, 10 October, in Federal Parliament by Mr Mark Vaile, Leader of the Nationals, Deputy Prime Minister, Minister for Transport and Regional Services, who said he would be writing to banks asking them to be sympathetic to their farming clients and do their best to provide help and assistance.

Banks have been providing our rural communities with special consideration and understanding during this difficult period by examining a customer’s circumstances on a case-by-case basis.

David Bell, Chief Executive of the ABA, is urging any bank customer who is worrying about the impact of the drought on their financial position to contact their bank, if they have not already done so.

“Banks manage the impact of drought on customers 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,” Mr Bell said.

During drought:

• farmers and rural businesses will want to identify and manage all costs that can be deferred in the short-term;
• in some cases, individual banks may, as a short-term measure, typically lend farmers carry-on finance to enable shortfalls in cash flow to be met;
• farmers that already have significant debt need to be prepared to draw on financial reserves such as Farm Management Deposits, investments in managed funds and other forms of off-farm investments;
• in some cases, to help reduce cash outgoings, individual banks may put in place the short-term measure of restructuring existing loans so as to reduce annual debt repayments - this may involve extending the term of a loan or allowing interest-only payments for a period of time.

Banks recognise that drought is a part of the normal business cycle of farming and understand its impact on farm incomes.  Banks have, and will continue, to work with Governments that provide assistance to farmers and rural communities in times of drought in the form of interest rate subsidies, fodder subsidies, fodder transport subsidies, livestock transport subsides, crop planting grants, general grants, unemployment benefits and Austudy assistance.


For further information:

Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

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