The recent widespread rain is welcome relief for many South Australian primary producers enduring this brutal drought.
But as we all know, the drought is far from over and, even when it is, its impacts will still be felt for years.
Primary Producers SA and its commodity group members continue to engage with government to highlight the above message and ensure producers’ voices are heard on North Terrace and in Canberra.
For many family farms, the most significant ongoing impact of the drought is access to working capital. The urgency to extend credit to maintain farm operations has never been more acute.
Minister for Primary Industries Clare Scriven recently convened the second Agribusiness Drought Finance Forum, which PPSA co-chaired.
This forum brought together representatives from industry, the banking sector, and government and was an opportunity to deepen our collective understanding of current rural lending practices, including the application of responsible lending obligations under existing legislation.
While it was encouraging to witness the banking sector’s willingness to engage, the looming risk of a third consecutive failed growing season in some areas presents a profound and escalating credit challenge.
What was evident from the forum was that there is a trend towards non-bank borrowing, which is an indication of bank products and services being inadequate.
We believe there is an urgent need for an alternative line of credit to supplement the agribusiness and commercial lending facilities currently available.
This is highlighted by the results of a recent Grain Producers SA survey which revealed that one in two SA grain producers are currently facing difficulties accessing finance or credit during the drought.
This correlates with another point raised at the forum; that a longer timeframe of assessment is required to accurately capture the average performance of agribusinesses.
The current uncertainty surrounding federal concessional loan funding, specifically the Regional Investment Corporation’s funding beyond June 30, 2026, underscores a significant and ongoing inequity in how the National Drought Agreement supports farm businesses across Australia.
State-sponsored concessional loan schemes are available to producers in Qld and NSW but remain out of reach for SA farmers.
This disparity places our producers at a distinct competitive disadvantage as they contend with worsening drought conditions and mounting credit risks.
PPSA’s commodity group members are reporting a growing number of otherwise viable, family-owned farm enterprises now facing critical working capital shortfalls.
PPSA fully supports GPSA and Livestock SA’s calls for concessional or zero-interest loans for drought-impacted producers.
Given the rigid lending criteria of first-tier lenders, we believe this cohort is unlikely to be adequately serviced through traditional mechanisms.
Left unaddressed, this emerging market failure could have devastating consequences for regional communities, underlining the need for targeted and timely government intervention.
PPSA and our commodity group members remain committed to collaborating with government to ensure drought support at both federal and state levels is equitable, strategic, and responsive to the challenges confronting South Australian agriculture.
