Farm Management Deposits scheme records double-digit growth to $5.82 billion

Strong returns for Australian family farms are being reflected by growth in the farm management deposit scheme to $5.82 billion.

Australian farmers have banked more than $5.8 billion in farm management deposits so far this financial year, amid a suite of challenging economic and seasonal conditions.

The latest figures from the federal government’s FMD scheme show double-digit growth across the board, indicating strong returns for the nation’s farming families in the past 12-18 months.

Total scheme deposits from Victorian enterprises had reached $1.481 billion by March 2023, a 10.5 per cent increase compared to March last year.

Deposits from beef enterprises increased by 23 per cent to $198.9 million; grain enterprises saw a 16 per cent lift to $252.8 million; while in the dairy and sheep sectors there was a rise of 11 and 8.7 per cent respectively.

There was, however, an increase of just 3 per cent in the number of accounts opened compared to March last year.

An FMD account allows primary producers to make tax deductible deposits of up to $800,000 during more profitable years, which they can then withdraw during challenging years.

NAB executive regional and agribusiness Khan Horne said agribusinesses were using the FMD scheme to build “resilience” into their enterprises as interest rates continued to rise.

“Conditions have changed significantly in the past year, moving from an ultra-low to a rising rate environment, with the RBA increasing the cash rate 10 consecutive times, from 0.1 per cent to 3.6 per cent,” Mr Horne said.

“The growth in FMD volumes can be attributed to a range of factors including excess liquidity in the deposit system, coinciding with the first uptick in interest rates as part of the current rate tightening cycle.”

Deposits in the FMD scheme reached a record $6.76 billion in June last year. Mr Horne expected to see another flood of cash into the system before the 2022-23 financial year ends.

Victorian cattle producers have increased their deposits into the FMD scheme in the last 12 months by more than 15 per cent. Picture: Zoe Phillips

“Agribusinesses are already considering and using tax-effective FMDs as part of well-considered tax planning and to build resilience into their business,” he said.

“FMDs typically spike in the June quarter, largely due to tax planning and we expect to see a topping up of FMD balances as the financial year closes out.”

Nationally, the total FMD balance increased by 10.8 per cent to $5.82 billion while the number of accounts grew by just 3.7 per cent.

The total FMD balance in NSW significantly outpaced the rest of the nation with 18.7 growth to $1.37 billion.

Beef enterprises in NSW recorded a 38.7 increase in deposits while grain enterprises spiked by 33.7 per cent.

Across the state there was a 19.88 per cent increase in the number of beef enterprise accounts to 2165 while there was a 13.05 per cent increase in the number of grain accounts to 1490.