But if they follow the lead of the major home lenders and only reduce rates by 0.8pc, that saving will be reduced to closer to $3000 per year for an average farm debt of $420,000.

One way or the other, Agriculture Minister Tony Burke said the rate cut would provide some relief from the difficulties of drought.

"Many farm businesses have significantly increased the debt they are carrying, as the drought has dragged on," Mr Burke said.

"The drought saw average farm debt in Australia grow from $238,000 per farm in 2001-02 to around $702,000 per farm in 2006-07.

"Interest rate relief on farm debt will provide a significant boost after many years of financial pressure.

"However, we can’t forget that conditions remain very tough in many rural areas, as the drought drags on and global factors such as the price of fuel and fertilisers continue to affect farm businesses."

But Mr Burke said one benefit for many farmers would be the growth in export earnings due to the lower Australian dollar.

"A falling Australian dollar, just as many farmers are moving to harvest, will provide its own level of relief for many farm businesses.

"At the same time, the falling dollar will also place further pressure on the growing cost of farm inputs – many of which are imported."