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Low interest rates and exchange rates benefit farm incomes



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GPO Box 1563 Canberra ACT 2601

Telephone (06) 272 2000 Facsimile (06) 272 2001 International code 616 http://www.abare.gov.au

12 August 1997

Low interest rates and exchange rates benefit farm incomes

‘Profitability in the farm sector has benefited substantially from interest rate reductions over the past five years ’ Mr Vernon Topp, a senior economist from ABARE, said today when releasing ABARE current issues no. 6, ‘Effect of interest rate changes on farm sector

‘For example, using ABARE’s farm survey data we estimate that a one percentage point reduction in interest rates is worth an average of $940 per broadacre farm, with the estimated benefits ranging from $520 per farm for sheep-beef farms, to $1310 per farm for specialist cropping farm s,’ M r Topp said.

The ABARE study also showed that a depreciation of the Australian dollar of one per cent would lead to an estimated increase in broadacre farm cash incomes of $1000 per farm, on average, with crop specialists gaining around $2500 per farm, and beef specialists gaining, on average, $360 per farm.

Mr Topp added that with interest rates expected to remain around current levels over the medium term, and the Australian dollar expected to depreciate slightly against our major trading partners, the benefits to Australian farmers of the current macroeconomic

environment should continue.

For further information, contact Vernon Topp (06) 272 3823. Internet copies of the report are available at http://www.abare.gov.au under ‘new’ heading. For copies of the report contact Denise Flamia (06) 272 2211. For general media enquiries, contact Sharon Palmer on (06) 272 2257 or after hours on 018 487 825.

incomes’.

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