Rural lenders have been urged by the Federal Government to pass on recent interest rate cuts to farmers at a special agri-business summit in Sydney today.
So far only Westpac and Rabobank have passed on 0.8pc of the 1pc cut in official interest rates to their farm customers.
The summit discussed the implications of the world financial fallout on agriculture.
Representatives of the four major banks plus Rabobank, farm leaders, industry groups and government staff were called to the meeting in Sydney, convened rather quickly by Minister for Agriculture, Tony Burke.
Interest rate cuts, the current drought, and exports (particularly to the US) were some of the major topics on the closed-meeting agenda.
Mr Burke told reporters in Sydney following the meeting that the mood in the room was one of "cautious optimism".
"But strong optimism in the sector in the medium-to-long term and that's important," he said.
"There are a number of issues that I put on the table right from the beginning.
"In particular, wanting to make sure that the cash rate cut in interest rates can be passed on as much as possible to farmers, in the same way as we have seen with people with residential loans.
"Now certainly the business products that farmers take on are often quite different to residential loans.
"But I've left the meeting with a good level of confidence that we will start to see farmers receiving benefits from that interest rate cut."
Mr Burke said the global financial crisis has the capacity, as economies around the world may slow down, to see a consequent reduction in their demand.
"All the forecasts that we received today say that this is unlikely to have a significant detrimental impact on Australian agriculture," Mr Burke said.
But he said the costs of inputs have been of extraordinary concern for some time to Australia's farmers, with fertiliser prices virtually tripling over recent years.
"The fall in the Australian dollar carried a risk that the pain of these input costs would get much worse.
"Fortunately at the same time that the dollar has gone down, there has been largely a global easing of a large number of these input costs.
"This means that while we're not getting the full benefit of the global easing of those prices, it does mean that the input cost burden is not getting worse as the dollar falls."
NSW Farmers Association president, Jock Laurie, did not attend the meeting and was only made aware it was being held this morning.
However, he said one of his main concerns about the broader financial crisis was how the coming harvest would be financed and where new exporters would get the money to buy wheat in the first year of a newly deregulated market.
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