Agriculture finance in Australia: Growing your finances & your crops

Agriculture and farming is a vital part of Australia’s infrastructure, with the entire agricultural industry making up roughly 3 per cent of the country’s gross domestic product, and creating 1.6 million jobs.

Farmlands and bodies of water cover an estimated of roughly 61% of Australia’s landmass and surrounding waters. This enormous industry is made up of anything from wool, wine, dairy, cotton, meat, fruit, vegetables and fish and seaweed.

Agriculture as an essential industry

Farming in is vital to Australia’s economy. Where would a country be if it was unable to provide for it’s people’s basic needs? Not to mention the vast opportunity that arises when the export and import market is considered, foreign trade being a huge opportunity for profit and economic growth.

Countless lives revolve around the agricultural industry and the benefits it brings, be that in the form of jobs, foods, textiles and other products are unfathomable.

So how do our country's agricultural businesses fund growth? To better understand agriculture finance in Australia, we need to look at some facts and figures to bring us up to speed.

What Australian farmers bring to the table

Because farming is year-round work for seasonal gain, it’s generally assumed that profits are difficult to make. However, farmers all around Australia had brilliant years from 2017 to the present, with agriculture bringing in a total of 60 billion dollars in 2017 alone.

This whopping amount no doubt benefitted the country enormously. It was also 8% higher than the profit brought in by farming in the five years prior, meaning that the industry has seen incredible growth.

Despite the difficulties that farming companies face, they continue to make strides in leaps and bounds, constantly growing the agriculture industry and their crops, to ensure that the people of our sunny country are well-fed year-round. But how do they grow their finances?

Finances Providers and farmers: A mutually beneficial relationship

Lenders support the industry with specially tailored packages set in place for farmers who need finance. With so many farmers needing financial assistance in all aspects of their work, be it buying their farm or buying the equipment necessary to run it, brokers and lenders across the country are constantly evolving to be able to cater to these needs.

Most companies are willing to lend a farmer between $50 000 and $200 000, or up to 60% of the total cost incurred in the purchase of the land and equipment they need to operate. This means some finance must be brought to the table in advance to facilitate the lending process as a whole.

Despite a range of finance options available, many farmers find themselves in heavy debt, with some 30% of farmers suffering in the last few years with debt and bills they can barely afford to pay. The Australian government has had to step in time and again to ensure that these farmers can keep their businesses up and running.

Getting a loan as a farmer

Acquiring finance as a farmer or agricultural professional in Australia works much the same way as getting finance in any other aspect of the market. One must apply for a loan with either a bank, a certified lender or the government to get the money they may need.

This can be a costly process, but financial assistance is available to those who need it. The cost of starting a small farm can be anything between $300 000 and $1000 000. These are astronomical sums which means new farmers need to have the serious financial backing to support their establishment and growth. Loan tenure can last about 20 years, much like a typical home loan.

How the bank views agriculture loans

The turnaround time is reasonable and banks are usually sensitive to the farmer's needs around harvest, aware of the financial gain that comes in around this time. Happy farmers, happy people, happy banks.

In this way, and many others, banks are extremely fair with loans on agricultural land and equipment. There are absolutely no hidden costs or pitfalls surrounding the loan, and the repayment terms and amounts are exceptionally fair and flexible. Any farmer taking out an agriculture loan will be met with fair and reasonable terms and demands.

With farming almost being a point of Aussie pride, this is completely understandable. There are requirements and conditions for acquiring this type of loan, usually with regards to age, income and viability of profit, but most farmers find themselves eligible for a loan with ease.

Credit and background checks

Lenders follow a standard procedure when it comes to credit and background checks. Those individuals who might need extra assistance have the option to get a business or another individual to sign as surety for them.

Another strong source of finance for agriculture professionals are investors. These are businessmen and women who are willing to forward said farmer a portion of the cost incurred in the purchase of their land and equipment, in exchange for a share of the business or a share in profits, once the farm is up, running, and on its feet.

Investments in farming

There is a positive cornucopia of companies in Australia that one can use to invest in the agriculture industry. This is indicative of how passionately Aussies feel about agriculture a whole, as the demand for accessibility to these options leaves the investment wide open, with good availability for anyone to put their money toward farming.

There is actually an abundance of different companies dedicated to assisting in supplying farmers with finance, and one can go through any number of these to assist and benefit from them, in and outside of the industry.

Investors have taken a huge interest in investing in farming finance. The circulation of this money, not only inside the country but in the industry itself, keeps the agriculture sector strong and well-funded. Passion and dedication drive Australian farmers and the people that fund their growth.

So there you have it

It’s about as easy, if not even easier, for a farmer or prospective farmer to gain access to finance in Australia. Be it for a farmer that is starting out, or for a well-established agricultural specialist, funds are always available. If not from smaller investors with a more personal relationship, there are massive companies in place willing to assist you wherever they can. From personal loans to business loans, the options are available.

With the proper research and by going through the proper channels, a farmer can find some excellent opportunities to grow their business and access the finance they need, no matter what their circumstances. So with that in mind, you can begin your journey into the world of agriculture with peace of mind knowing full well that you’ll have all the help you’ll ever need.