Trends in farm debt: Agricultural lending data 2020–21
ABARES prepares annual reports and data dashboards on the level of lending to the agricultural sector, based on data collected by the Australian Prudential Regulation Authority (APRA) on behalf of the Australian Government Department of Agriculture, Fisheries and Forestry (DAFF).
The 2020–21 APRA collection period is from 1 July 2020 to 30 June 2021. For the 2020–21 report, ABARES also analysed data from the Reserve Bank of Australia (RBA), the Regional Investment Corporation (RIC) and ABARES farm surveys.
This dashboard was last updated on 13th September 2022. The PowerBI dashboard may not meet accessibility requirements. For information about the content of this dashboard contact ABARES.
- Debt financing remains of critical importance to the farm sector, both to fund new investment and to help manage variability in farm revenue and profit. For broadacre and dairy farms—which collectively accounted for around 68% of the value of farm output in 2021–22—the two main reasons for borrowing are to fund land purchases and for working capital.
- The latest agricultural lending statistics provided by the Australian Prudential Regulatory Authority (APRA) show an increase in lending to the farm sector in 2020–21. At the national level, the value in real terms of loans and leases owed by the farm sector was $94 billion at 30 June 2021, an increase of around 6% from the previous June.
- Analysis of ABARES farm survey data shows that much of this increase in borrowing was for on-farm investment, particularly land purchases. Rising land prices and low interest rates have provided farmers with greater equity to support increased borrowings, while historically high farm incomes in most agricultural industries have substantially improved farmers debt servicing capability.
- Lending to the agricultural sector increased in all states and territories during 2020–21, with the largest percentage increases in real terms occurring in Queensland (7%) and New South Wales (7%).
- In 2020–21, aggregate interest paid by the agriculture sector fell by around 13%, with lower interest rates more than offsetting the increase in total lending to the sector. The average proportion of farm cash income (receipts less cash costs) consumed by finance payments has trended down in recent years due to improved farm incomes and lower interest rates. In 2020–21, the average proportion of income consumed by interest payments was 11% for broadacre and dairy farms.
- A high proportion of aggregate debt is held by a small number of very large farm businesses that generate high cash flows on average to finance debt. In 2020–21, 5% of broadacre and dairy farms accounted for around 47% of aggregate debt, whereas nearly 50% of farms had very little or no debt.
- The proportion of broadacre and dairy farms with relatively low additional borrowing capacity (equity ratio of less than 70%) and relatively high debt servicing commitments (finance payments greater than 40% of farm cash income) was 2% of farms in 2020–21—compared to 7% of farms in 2010–11.
- The aggregate value of loans and leases that were more than 90 days past due decreased by $341 million during 2020–21. When expressed as a share of total lending, loans more than 90 days past due represented 0.8% of loans and leases in 2020–21 compared with 1.2% in
- Data from the RBA shows that aggregate debt for the agriculture sector continued to increase throughout 2021–22, by around 12% from 30 June 2021 to 30 June 2022.