Agricultural Lending Grows as Farmers Invest in Expansion

By Ian Rogers

The Australian Prudential Regulatory Authority (APRA) reports a 6% increase in agricultural lending to the farm sector during 2022-23, with total agricultural debt reaching $120.5 billion.

Dr. Jared Greenville, Executive Director of ABARES, attributed the rise in debt to ongoing investment in the sector.

“Farmers are borrowing to reinvest in their businesses, with a particular focus on land purchases as they expand their operations,” Dr. Greenville said.

“Higher land prices have increased equity, enabling farmers to manage debt more effectively, while strong farm incomes over recent years have supported their ability to service these borrowings.”

Uneven Distribution of Farm Debt

The data reveals an uneven distribution of debt across farms. In 2022-23:

• 5% of broadacre and dairy farms—mostly those with the largest turnovers—accounted for nearly 40% of total debt.
• Nearly 50% of farms in the same categories carried little to no debt.

Dr. Greenville highlighted the low proportion of farms in financial stress due to debt in 2022-23.

“For instance, fewer than 1% of broadacre and dairy farms had both low borrowing capacity and high debt-servicing commitments, compared to an average of 7% over the last 20 years,” he noted.

Future Challenges

Despite these positive indicators, Dr. Greenville acknowledged shifting dynamics since the 2022-23 reporting period.

“Higher interest rates, combined with lower average farm incomes, changing seasonal conditions, and fluctuating commodity prices, are likely influencing borrowing decisions moving forward,” he said.

Explore the Data

Detailed insights into trends in farm debt can be found in the ABARES report: Trends in Farm Debt: Agricultural Lending Data 2022–23.

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