Sydney, 16 December, 2002: The Deputy Prime Minister, Minister for Agriculture, Fisheries and Forestry, and  representatives from the banks including the Australian Bankers’ Association met today to discuss the situation with the continuing drought now occurring across much of Australia.

In a positive meeting, fruitful discussion took place about what farmers, small business and regional communities need to ensure that there is a sound financial foundation for recovery when the drought breaks.

The banks confirmed the importance they place on the continuing strength of the Australian agricultural sector.  The seriousness of the present situation is well recognised.  It was agreed that we are dealing with a high-tech part of the economy which involves years of accumulated development and expertise in the sector.

The meeting recognised that the key issue is the need to maintain equity, particularly in breeding stock and in replanting capability so that the sector can quickly recover when the rains return.  The key to this is to provide a sound financial foundation for recovery.  To this end there was an emphasis on post-drought recovery and the need to work on various financing options.

In response to the drought, individual banks have in place their own policies on interest rate margins.  Each bank has today confirmed its intention to maintain its policy on interest rate margins for farmers receiving Exceptional Circumstance assistance.

The Farm Management Deposits (FMDs) Scheme was highly praised by the banks for the ability it gives farmers to put money away in the good years to draw down in the bad years.  The banks noted that the introduction of FMDs has better equipped farmers to cope with the impact of this drought.

The banks and the Ministers agreed to develop an improved liaison system between the Government and the banks to improve feedback to the Government.

Media Contacts:

Mr Anderson’s office          Duncan Bremner        0427 200 674

Mr Truss’s office               Tim Langmead           0418 221 433

ABA                                Heather Wellard        02 8298 0411 / 0409 830 439

ENDS