INTEREST RATE INCREASE TO IMPACT ON PRIMARY PRODUCERS

Already struggling primary producers would be battered by an extra $1000-plus a year in repayments in the face of the latest interest rate rise, Minister for Primary Industries and Fisheries Tim Mulherin said today.

“The latest of three interest rate rises will only add to the increasing pressure on Queensland’s primary sector,’’ Mr Mulherin said.

“Based on figures from the recent Rural Debt Survey, the 0.25 percent rise will lead to an increase of approximately $1050 per annum on the average debt of $531,690 over a 20-year term.

“This means considerable pain for producers in drought declared areas where cash flows have been poor for a number of seasons.

“With increasing fuel prices and fertiliser costs there is growing pressure on these operations.

“In the far north of the State primary producers have already been impacted by Tropical Cyclone Larry, particularly those from tree crop industries, and it will be some years before cash flows will be generated from those crops.”

Mr Mulherin said based on the total rural debt in Queensland of $8.67billion, the total cost of the most recent rate rise would be in the order of $21.675 million.

“That’s money that could otherwise be used much more productively than simply servicing debt generated by yet another rise in interest rates,” he said.

“On top of this, many producers have home mortgages as well as farm debts and also face an additional $40 a month on a home mortgage of $225,000.”

The major movement in industry debt in the 2003-2005 period were in the beef industry which increased by 120%, grain/grazing with an increase of 28% and the sugar industries with an increase of 24% since 2003.

“QRAA have QRAA has administered more than $1 billion to rural debt in the past 12 years with this year being a particularly busy time for providing assistance to primary producers with the ongoing drought and cyclones Larry and Monica.”

The Rural Debt Survey, which is commissioned by QRAA and prepared by Moore Stephens, is based on information supplied by rural lending institutions and includes all Queensland primary producers with borrowings.

Media: 3239 6530