Barnaby Joyce wants cheap loans for farmers, but will it help small business?

The outcome of Agriculture Minister Barnaby Joyce’s calls for the federal government to offer an extra $280 million in cheap loans to embattled farmers could have flow-on effects to rural small businesses, the National Farmers Federation suggests.

Joyce wants the loans to be given at highly discounted interest rates to farmers having trouble paying off commercial bank debts, in addition to the $420 million Farm Finance loan package which was released in 2013.

Last week Joyce said he was in favour of a Rural Reconstruction and Development Bank within the Reserve Bank, which could take on poor rural loans from the private sector at a discounted price.

Yesterday he was touring drought-stricken regional communities, accompanied by Prime Minister Tony Abbott.

Joyce told wool and meat producers in Broken Hill that the farmers were “doing a decent thing for our nation”, The Australian reports.

The government is yet to confirm the size of the relief package it will offer farmers. However, Joyce told The Australian that Abbott had got the message from farmers first-hand about the struggles they were facing.

“How well (that has impacted on the Prime Minister’s views) we will see over the next week,” he said.

Abbott told media he would not comment on the likely details of a package.

“There are two (drought) needs here: an immediate need for income for people to live on now, and a slightly more longer term (policy need) of money for businesses to restructure after the drought,” Abbott said.

A spokesperson for the National Farmers Federation told SmartCompany that if farms cannot survive, the “flow-on effect” to the surrounding communities and businesses was significant.

NFF president Brent Finlay said in a statement the drought faced by Australian farmers is “simply a situation that the best planning could not prepare them for, and there are devastating effects on entire communities”.

“We need to ensure drought relief – as would be the case with any natural disaster – supports these farmers, their families and communities. The provision of this assistance is a matter of priority for the government to action immediately,” Finlay said.

This week the National Farmers Federation released detail on its proposed Drought Relief Package.

Finlay said the aim of the package is to see farm businesses given “a fair shot at getting back on their feet”.

“As we have said before, we aren’t asking for handouts — we’re asking for a logical step forward, to help viable Australian businesses during a very tough time — enabling them to continue to produce the high-quality food and fibre for this great nation and many overseas markets.”

The NFF package includes calls for labour wage assistance, realistic eligibility criteria for existing programs, and the improvement of social services.

“The NFF is strongly committed to advocating for long-term drought policy solutions that drive preparedness for farm businesses in the future. However, when there’s not a drought on, it’s difficult for preparedness to remain a top priority for government, as we have seen in recent years,” Finlay said.

The NFF reports that Australian agriculture contributes around $38 billion to export earnings in Australia per annum.

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