Farmers miss rates cuts
WHILE most of us waited eagerly yesterday for the expected news the Reserve Bank had again cut interest rates - an expectation that proved sadly unfounded - many of Peter Graham's farmer mates would have met the news with glum indifference.
Over the past few months, many banks have chosen to withhold most of the Reserve's largesse from their farming customers and, in at least one case, have passed on none of their rate cuts.
While banks this week talked about absorbing costs so they could pass on rate cuts, Federal Nationals leader Warren Truss levelled a broadside at banks using high rates on agribusiness and small business while claiming credit for matching the Reserve's cuts on retail mortgage rates.
"Home owners are painfully aware that when interest rates go up the banks show remarkable dexterity in passing on the rise, in full and immediately, but when rates fall they are notoriously tardy in providing relief," Mr Truss said.
"But it's even worse for Australian farmers. With attention on mortgage rates, agribusiness loans slip under the radar and the banks are getting away with not passing on cuts.
"Despite successive official rate cuts of 0.25% in November and December last year, farmers were shafted. Only Suncorp Agribusiness, to its credit, passed on the full 0.5% cut to its farm loan holders.
"But ANZ Agri- business, Commonwealth Bank Agri, NAB Agri, Bananacoast Community Credit Union, Bendigo Bank and Westpac Agribusiness only passed on miserly partial cuts. Others, like BankSA Agribusiness, simply abandoned our farmers and hoped no one will notice that they failed to pass on any cut at all."
Mr Graham, a dairy farmer at Codrington, said Suncorp was not the only institution to pass on the full rate cut - smaller rural lenders such as Rabobank, where he did his banking, also passed on the cuts.
Bananacoast Credit Union was last night preparing a response to Mr Truss's comments.
Mr Graham said he knew other farmers whose banks had refused to pass on the full rate cuts - something that was particularly hard given the banks were already charging them a higher rate just for having the gall to be farmers.
Mr Graham said agri-business loans typically carried a premium on top of the standard rate of between 1.25% and 2.5%. The harder the time a farmer was having on the land or in their industry, the higher the premium.
"It's pretty tough out there in agriculture," he said.
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