FMDs will keep breaking records

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Farm Management Deposits (FMDs) are expected to keep breaking records as farmers embrace an increase in account limits amid good seasons and prices in many regions, according to National Australia Bank (NAB) Agribusiness.

Speaking at the Rural Marketing Agents Association Conference in Cairns today, NAB Agribusiness General Manager Khan Horne said that FMDs are part of the long term solution to increase the resilience of the farming sector and reduce reliance on drought loans.

“I fully support the recent changes announced in the Federal Government’s Agricultural Competitiveness White Paper to double the threshold of FMDs to $800,000 and increase farmers’ capacity to save. It’s not the only solution to boost drought preparedness but it’s part of it.”

FMDs rose to an all-time high of $4.6 billion in June 2015, an increase of 11 per cent or $465 million on the same time last year. We expect see FMDs continue to grow in volume over the long term, but it is important to note that we always see a reduction after 1 July due to the saw tooth nature of FMDs.

Both Victoria and New South Wales broke the 1 billion mark for the first time.

“The grain and mixed farming sectors led the way, contributing nearly 70 per cent of the new volume in 2015. Horticulture, other crops, beef and sheep-beef sectors added more than $25 million per sector to their savings,” Mr Horne said.

“The numbers show that farmers are also using their FMDs to manage cash flow. We can see that $600 million has been withdrawn between 1 July 2014 to the March quarter 2015, and $1.1bn was then deposited in the June quarter.

“Since 1999 FMDs have grown from 1 per to 6 per cent, as a proportion of farm debt, meaning that farmers’ ability to manage cashflow in tough times has significantly improved.”
Agribusiness View provides the latest insights from NAB Agribusiness. Visit nab.com.au/agriview to sign up as well as to find the contact details for your nearest NAB Agribusiness Manager.

Important Note: Any advice in this editorial has been prepared without taking into account your objectives, financial situation and needs. Before acting on this advice, you should consider its appropriateness to you.

About NAB Agribusiness

National Australia Bank (NAB) Agribusiness is Australia’s leading Agribusiness Bank and has been supporting Australian farmers for more than 150 years. NAB employs more than 600 agribusiness banking specialists in 110 metropolitan and regional locations Australia-wide. With their local and industry knowledge, our Agribusiness team understand the unique financial and environmental needs of farmers and businesses beyond the farm gate – whether they provide inputs into agriculture or process, distribute or market primary produce. NAB also has a specialist Agribusiness Asia Desk to help Australian farmers make the most of the rapid growth in demand for high quality produce in Asia. We deliver a flexible range of agribusiness products and services by listening to and working with our customers, to tailor the best packages and advice for their businesses. For further information please visit www.nab.com.au/agribusiness.

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