The NSW Government will immediately reduce the cost to farmers of undertaking a Drought Ready and Resilient Fund loan by reducing its interest rate by 1 per cent, following a review of the loan to look at options for broadening its uptake by farmers.

The $250 million Drought Ready and Resilient Fund (DRRF) already offered low-interest loans up to $250,000 to assist primary producers prepare for, manage and recover from drought.

The NSW Minister for Agriculture, Tara Moriarty, called for the review after examining the uptake of the loan after nearly two years of operation and listening to feedback from farmers across the state, but especially in southern NSW.

Normally the interest rates for the five-year and 10-year DRRF loans would today have been 4.98 per cent and 5.81 per cent respectively.

However, to provide relief the loan rates will now be reduced by 1 per cent to 3.98 per cent for five-year DRRF loans and 4.81 per cent for the 10-year loans.

The 1 per cent reduction will save a farmer around $7,000 over a five-year loan and $15,000 over a 10-year loan for the borrowed $250,000.

Typically, commercial lenders in the market would offer rates of up to 10 per cent for similar-purpose loans.

The interest rate that applies to a DRRF loan is set on the day the loan is drawn down and remains fixed for the life of the loan. For the DRRF loan, interest rates are indexed to NSW Treasury Corporation (TCorp) bond rates, which can vary from month to month.

The Minns Government is reviewing the other aspects of the DRRF to improve what can be offered to farmers experiencing drought conditions or wanting to prepare for future drought settings, with a view to announcing further loan changes soon.

The Fund is open to all farming businesses, including young farmers, new entrants to the industry, and those who have experienced increased off-farm income as a result of recent natural disasters.

Minister for Agriculture and Regional NSW, Tara Moriarty, said, “Farmers have told me they don’t want a handout, they want a leg up, and reducing rates for this Fund will make sure these loans are more accessible for those farmers in need or planning to cover challenging times.

“The Minns Government’s Drought Ready and Resilience Fund was set up to provide additional assistance to farmers and make available lower-rate loans than what people could get from other financial institutions. Following my review, we have seen how we can lower even further the interest rate.

“We have listened and have reduced rates even further to ensure these loans are a better option for producers in drought-affected regions.

“While rates may increase or hopefully decrease in the future due to underlying bond rate changes each month, the 1 per cent interest rate reduction for the Fund’s loans will remain in place.

“The Drought Ready and Resilient Fund Loans now represent the most affordable loans of their kind on the market, delivering significant savings compared to any commercial lending alternative.