Drought-hit farmers struggle to get finance, Grain Producers SA survey reveals

Their plight has been in the headlines for months, but a new survey of drought-stricken farmers paints a stark picture when it comes to accessing the finance they need to stay afloat.

Drought-stricken SA grain producers are struggling to access the finance or credit they need to keen their farms alive.

A survey of more than 130 farmers has revealed that one in two are struggling to convince their banks to lend them money.

Grain Producers SA chief executive Brad Perry said the results highlighted high levels of drought-induced debt, tightening lender risk appetites and painted a troubling picture of farmers being pushed to the brink in a second consecutive year of statewide drought.

“This survey confirms what we are hearing right across the state – grain producers are being met with more hoops, stricter conditions, and slower processes to secure critical finance to get them through this season and beyond,” Mr Perry said.

Grain Producers SA chief executive Brad Perry. Picture: GPSA

“The survey shows there are examples of grain producers being told they don’t qualify for support due to the drought-impacted seasons, even if they’ve met their financial obligations previously.

“It’s a precarious situation for grain producers right across South Australia.”

Of those who reported difficulties accessing finance, nearly 60 per cent cited issues with bank lending. The most common challenges of those seeking finance were a lack of cashflow (29 per cent), approval processes (24 per cent), increased interest rates (17 per cent) and stricter lending criteria (9 per cent).

The overall average experience rating for grain producers dealing with their bank or

financial institution during drought was five out of 10 and only 15 per cent said their banks proactively offered drought-related support options.

Alarmingly, almost 10 per cent said their bank wanted a formal drought declaration before they would consider helping, even though federal and state governments agreed more than a decade ago to stop doing so.

The survey also revealed that some farmers had endured below average rain for seven of the past eight years and others are selling parts of their farm to keep their businesses afloat.

Other comments in the survey included:

“We had no income from the last harvest. Our overdraft has reached its limit. Also, we’ve had to redraw on all existing loans to their maximum. (Our bank) staff are frequently changing. Nobody seems to know what’s going on or making any commitment in helping with long term assistance.”

“We restructured our finance after the first dry year but now we can’t access any further funds.”

“We recently purchased another farm and are struggling to pay our current debts at present while expanding during poor seasons.”

“I tried to get on the front foot and have discussions with our bank and was told our rural finance manager has retired and the bank at this stage will not replace him. We have had to utilise savings earmarked for retirement to put a crop in.”

Originally published as Drought-hit farmers struggle to get finance, Grain Producers SA survey reveals