ABARES agricultural lending data 2021–22: Farm debt reaches record high

From dairy to beef and sheep, record spending on land has fuelled outstanding national farm debt, but will it continue?

A “tempered” outlook on short term investment spending for farmers and corporate farming families is expected after many made major capital and land outlays in recent years.

National farm debt increased by $9 billion during the 2021-22 financial year, according to a recent ABARES report, with farmers fuelled by the record low cost of borrowing, record high commodity prices and favourable seasonal conditions.

During those 12 months the cumulative value of loans outstanding increased from $100.7 billion to $109.9 billion.

Nationally the average farm capital value of sheep and beef properties soared by more than 40 per cent to $10.5 million while mixed livestock and cropping properties increased by 30 per cent to almost $14 million.

Thanks to record livestock prices in 2021-22, the average debt for sheep and beef property purchases was $514,000, a 40 per cent increase year-on-year.

The average debt for land purchases also rose substantially across other commodities including a 16.5 per cent increase to $796,000 for dairy farms.

Average debt for dairy land purchases reached almost $800,000 during the 2021-22 financial year. Picture: Zoe Phillips

There was also a 15.7 per cent rise in the average debt for land purchases for mixed livestock and cropping properties, taking the figure to $560,000.

ANZ head of agribusiness and specialised commercial Mark Bennett said he did not expect the levels of farm debt in Australia to increase at this rate again.

“The level of farm debt is no surprise after such a boom period following the poorer years,” he said.

“Conditions have been incredibly healthy for farming and have seen producers rapidly expanding, especially with record low interest rates.

“But there has been a bit of a check and a pause in the system.

“With increased interest costs and commodity prices down, particularly beef and others, there is a more tempered view now than in the past few years.

“Most farming businesses are taking a long view, not just for the next 12 months, but a cumulative long view of their own family needs and business aspirations.

“For many the last few years were a period in time that was the best they have ever seen or experienced and it is difficult to know the likelihood of that repeating in the future.

“Even though there is longer term confidence in the nation’s ability to produce and the world to need what we produce, in the short term producers are preparing for things to be a bit tighter.”