With total national rural debt of about $72 billion and an average Queensland farm debt of about $637,000 per farm, primary producers will certainly have an interest in the outcomes of the Turnbull Government’s banking Royal Commission.
There have been many recent inquiries into the financial services sector and the banking system but often their recommendations haven’t been acted upon.
AgForce wants to see transparency, fairness and consistency in the way banks deal with agriculture and farm businesses, and ultimately complete community confidence in our banking system.
We would hope this inquiry not only looks at how any poor systemic practices can be fixed but also how the banking sector can further improve how they help our industry grow.
Queensland farmers need affordable access to finance if we are to fully capitalise on the increasing global demand for our high-quality food and fibre.
The banking sector provides access to this essential finance, which in the overwhelming majority of cases helps to build the wealth of farmers, so we need well-functioning loan products and banks, and for farmers to have good relationships with their lender.
Earlier this year, the Queensland Parliament passed farm debt mediation laws which mandated an offer of mediation before foreclosure action occurs. While a positive development, the best outcomes are likely to be achieved through dealing with problems when they first emerge.
AgForce sees the planned but not yet established Farm Debt Restructure Office within the Queensland Rural and Industry Development Authority as potentially offering a proactive option for producers facing debt difficulties.
Some agriculturally relevant issues identified in previous inquiries include for bank officers, valuers and receivers to act in the best interests of small business customers, ensuring adequate notice of needed refinancing, the use of penalty interest rates, and non-monetary defaults such as changes in loan to asset ratios where repayments are still being made.
The banking Royal Commission provides an opportunity to address the poor practices of the past, act on any previously overlooked recommendations, and more positively, look at how the sector can better work with farmers to attract more investment and grow their businesses.