The Farm Management Deposit (FMD) scheme was established at the end of the Millenium Drought in 2009 to help farmers build financial resilience to cope with long dry periods. The scheme encourages farmers in good years to set aside pre-tax income into FMD accounts and build up cash reserves to remain financially self-reliant in bad years. Deposits are tax deductible in the financial year they are made, and become taxable income in the financial year that withdrawal takes place.

The scheme looks spectacularly successful if measured by the $6.7 billion saved into FMD accounts over the 10 years to June 2019. It also appears on face value to be working as intended, given that between June and September this year, as the current drought started to really bite in NSW and Queensland, farmers withdrew nearly $1 billion in FMD funds.