Kondinin Group researcher Toni Nugent said funding working capital is the main reason for the trend towards farmers working with increased debt levels.

“The average farm business debt increased by 18 per cent for broadacre farms during 2007-2008, with most of this increase coming from land purchases,” Mrs Nugent said.

“The increase in farm debt also corresponds with an increase in interest-only loans and the total amount of interest subsidies paid to farm businesses through the exceptional circumstances programme.”

“Debt is an inevitable element of farming and the ability to access and service that is debt crucial to running a viable primary production business.”

The September 2009 Westpac and Charles Sturt University Agribusiness Index reported that one third of agribusinesses across Australia sought finance during the past 12 months.

South Australia (47%) and Western Australia (41%) had the highest level of agribusinesses seeking fincance, while New South Wales had the lowest levels (26%).

More than 500 Australian farmers rated their bank’s performance through Kondinin Group’s annual National Agricultural Survey.

According to the Group’s latest research, Australian rural banking customers were generally pleased with their bank but made it clear there was still room for improvement.

Participants were asked to rate their bank on a range of areas including products offered, online capabilities, the availability of their bank manager, and of course, bank fees.

“A total of 552 Australian farmers reported they were happy with the overall performance of their bank, affording them on average a 70 per cent score for performance in areas such as products, service, accessibility and online banking,” Mrs Nugent said.

“But banks were criticised for fees and pricing with overall performance ratings of 65% and 69% respectively.”

Kondinin Group’s latest research examines what has changed in rural banking as a result of the GFC and how more competition in the agribusiness sector is prompting Australian banks to better cater for their country clients.

The comprehensive report is published in the February edition of Kondinin Group’s newly launched publication Group Talk and online at farmingahead.com.au

Established during 1955, Kondinin Group is committed to helping farmers.

With a large and diverse membership across Australia, Kondinin Group continues to invest in agriculture by providing members with independent, reliable and practical information.