Farmers flock to apply for business loans as 82% of NSW declared drought free

After years of misery, the drought spell may finally be breaking for New South Wales, with 82% of the state now declared drought free.

But farmers aren’t just rejoicing with a celebratory dance in the rain. New research shows they’re also using this good fortune to fast track their business’ growth. 

For one, there’s been a surge in agribusinesses buying new farming equipment to prepare for this year’s crop season. The value of business loans lent out for agricultural machinery is up by over 100% in NSW since this time last year, according to figures released by the Commonwealth Bank today. 

“We’re seen asset finance for ag machinery, particularly tractors and harvesters, increase significantly,” Commbank’s executive general manager of regional and agribusiness, Grant Cairns said. 

“Across the country, new asset financing for tractors is up 119% - the highest volumes we’ve seen in the past three years, and financing for harvesters is up 108%.”

Cairns said those huge percentage jumps aren’t surprising, given how many incentives farming businesses have right now to invest. 

“Nationally, farm values are up, commodity prices are holding firm, interest rates are at record lows, seasonal conditions have been good, there is strong consumer and retail demand for fresh produce and there’s Government incentives like the instant asset write off scheme,” he said. 

For context, the instant asset write-off (now extended till 30 June 2021) allows businesses earning up to $500 million per year to claim immediate tax deductions on multiple asset purchases - capped at $150,000 each. 

This means the write-off would be able to cover ‘big ticket’ items like tractors and harvesters, giving farmers the opportunity to shave off a chunk of their 2020/21 tax bill.

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