Federal government unveils new hardship loans for farmers facing long-term drought
Farmers who have suffered through more than two years of drought and expect another rough season will be eligible for a new loan, as the government hands down its response to the RIC review.
Farmers who have faced more than two years of drought and expect to be hit with another rough season will be eligible for a new assistance loan.
The federal government on Thursday announced the new drought hardship loan, as it handed down its long-awaited response a review into the Regional Investment Corporation.
Under the new scheme, farmers will be able to borrow up to $250,000 in a five-year loan, with interest incurred by repayments fully deferred for the first two years. The loan is designed to help with short-term operating costs as farmers face longer-term droughts.
A second new loan product will support wild-catch fishers and aquaculture businesses affected by algal blooms and heatwaves, with both products available in the first half of next year.
However, interest rates on existing loans will be held at 5.18 per cent for another six months, in a blow to farmers who have called for zero-interest or lower-interest loans in the face of tough seasonal conditions this year.
The review - which was completed 18 months ago - had recommended the RIC not implement interest-free loans; a recommendation the government noted.
“The big question remains in times of exceptional drought, without the lever of interest free loans, does the RIC offer a genuinely better deal than the banks?” asked Victorian Farmers Federation president Brett Hosking.
“There’s no point having a service that mimics commercial options available and that goes to the whole purpose of why the RIC exists in the first place.”
National Farmers’ Federation president Hamish McIntyre welcomed the expanded loan options, and said that “farmers have been asking for certainty, and while we would have liked to see more detail on how recommendations are to be implemented … today’s response from the minister goes some way towards delivering that”.
“While details are limited at this stage, we acknowledge efforts to implement support for operating expenses during multi-year droughts, and the proposal to defer interest repayments for two years,” he said.
The Craik review was provided to then Agriculture Minister Murray Watt in 2024. It examined the scope and governance arrangements of the RIC after June 30, 2026.
Of the 32 recommendations handed down, 21 were agreed in full by the government, and six were noted.
Recommendations agreed to included reviewing the maximum loan amount every five years, strengthening RIC’s First Nations cultural capability and partnerships, and increase collaboration between RIC and commercial lenders.
The Craik review also recommended the “department investigate if there is an appropriate role for government in facilitating intergenerational change in the agriculture sector”, and if so, whether concessional loans, such as the AgriStarter Loan, were the most appropriate mechanism to do so.
The government agreed with the recommendation, and indicated that the analysis should consider what taxpayer support new entrants in other industries received and any equity implications.
Intended originally to administer funds related to drought concessional loans, the government announced a further $1bn in new loan funding for the RIC in August, committing to its future beyond June 2026, and broadened its scope to assistance to improving climate resilience, boosting sector productivity, and supporting the net zero transition.
So far this financial year, $76.8m in approved loans of a $350m pool have been granted, as of November 30.
