Despite their numbers generally shrinking, farmers and other agribusinesses borrowed a record 29 per cent more in 2021 than the year prior.
The Australian Banking Association's member institutions wrote a whopping $4.2 billion in loans to the farm sector every month.
Yet two thirds of Australian agribusinesses have no debt at all, or are reducing their borrowings.
Agriculture sector players also have a higher survival rate than the average Australian business, according to the ABA.
Its member banks, which lent more than 80pc of agribusiness funds last year, increased average monthly lending to the sector by $1b a month.
Interestingly, however, despite good market and seasonal conditions continuing, only about 10pc of farmers and ag service businesses expected to take on more debt this year.
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Latest ABA research showed in the year to February, 41pc of farm sector enterprises had no debt and no intentions to borrow more, while 29pc hoped to prune their borrowings as the prospect of rising interest rates loomed on the horizon.
By February, after a bumper summer harvest, overall farm lending had actually dipped slightly to $92.2b, down from its $93b peak in September-October last year.
Appetite for credit
Even so, agribusinesses still stand out as having a fairly strong appetite for credit compared to their business peers across all other sectors, particularly small and mid-sized farm enterprises.
According to the ABA report, while about four in 10 ag sector businesses had no borrowings at all, across the entire business category more than half had no debt and no immediate plans to borrow.
The most common borrowing products used in agriculture in the six months to February were overdrafts (46pc) and property mortgages (29pc).
ABA members saw their biggest jump in new farm sector lending activity late last financial year, when borrowings exceeded $6b in June, followed by another $5.5b peak as harvest season spending and property sale activity ramped up in December.
ABA's agribusiness report also identified South Australian, Tasmanian, West Australian and Queensland agribusinesses leading the industry's survival rate statistics, averaging above 84pc between 2017 and 2012.
They were marginally ahead of NSW and Victoria.
While agribusiness exit rates averaged 17pc, the figures for Australian business in general were around 25pc, with rural Queensland and NSW performing even further ahead of the business sector averages in their states.
Recovery period
"Australian agriculture, and the vibrant agribusiness sector it supports, pushed though COVID-19 relatively unscathed,'' said ABA chief executive officer, Anna Bligh.
"The sector is now well positioned to play a leading role during this longer-term recovery period.
In fact, bucking a long term shrinking trend in agriculture, agribusiness numbers grew 0.8pc last year to 173,131, although they were still well down on the 204,500 identified in 2009.
The ABA said over the longer term agribusinesses tended to have more conservative expectations than businesses generally, but both categories currently had similar forecasts for increased revenue.
Between 30pc and 40pc of small agribusinesses (those turning over less than $5m a year) expected to expand or grow.
Ms Bligh said while the global economic environment remained uncertain, the picture for agribusiness, supported by Australian banks, suggested the industry was forging ahead with confidence.
"Macroeconomic conditions are very positive, and as the farming sector recovers from recent years of drought," she said.
"Ideal seasonal conditions have resulted in bumper crop yields and strong prices are being experienced across a range of agricultural commodities."
Ag's GDP boost
In the December quarter of 2021 agriculture contributed almost $13b to Gross Domestic Product - well above long term trends.
Latest Australian Bureau of Statistics data shows the national economy also on an upbeat trend, rising 0.8pc in seasonal terms over the March quarter, with overall GDP up 3.7pc and terms of trade up 5.9pc.
Meanwhile, the ABA noted support for farm management deposits may have reached saturation point among those most likely to use them to help weather tough times on the land, even though average FMD balances are rising.
FMDs allow eligible primary producers to hold up to $800,000 in pre-tax term deposits until they need to spend the money when earnings are low, and initially had a strong uptake.
However the number accounts is down from its peak of 54,344 in 2017 to 43,162 in December 2021.
Savings in FMDs are also down from almost $6b in 2019 to $5.3b, although balances now average $124,000 compared to $90,000 in 2017.
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