Big banks should offset Farm Management Deposits
MINISTER for Agriculture David Littleproud has called on the big banks to help farmers manage drought and tough times by offering offset accounts for Farm Management Deposits.
A FMD allows farmers to remove money from their taxable income in good years by depositing it into a FMD.
They can then withdraw the money during a bad year and pay tax on the withdrawal then.
The Coalition Government increased the cap on FMD accounts from $400,000 to $800,000 in 2016.
The Coalition also allowed banks to give farmers the chance to use their FMD to offset loans, the same as a home loan often has an everyday offset account which offsets interest from the home loan.
However no big bank has taken up the opportunity.
"The big banks have been able to provide these FMD offsets since 2016, and time's up. The big banks need to right their wrongs. Our banks should back our farmers,” Minister Littleproud said.
Minister Littleproud said that the only bank that has gotten on board with FMD offset accounts was the Rural Bank and he applauded it for this.
"Big banks lend almost as much to credit card debt as they do to agriculture in this country,” Minister Littleproud said.
Minister Littleproud also said that agriculture was a much better debt than credit card debt.
He said that as this sector continued to grow, farmers were becoming more efficient and the reputation of Australian produce around the world was growing.
"I call on the big banks to offer Farm Management Deposit offset accounts and help our farmers manage through the good and bad years.”
Minister Littleproud said that farmers grow the food that we eat, including the food for bankers.
There are currently 49,549 FMD accounts in Australia.
The Australian Bureau of Agricultural and Resource Economics estimated last year that offsetting for FMDs would save farmers in tough times around $150 million a year.