RADIO TRANSCRIPT: RIC EXECUTIVE MANAGER, MELANIE MONICO SPEAKING WITH ABC’S LAURISSA SMITH ABOUT RIC LOANS FOR FARMERS SUFFERING FROM DROUGHT CONDITIONS AT AGFEST 2026.
Transcription
TONY BRISCOE: Well, if dry conditions can persist in much of the state, cash flow will inevitably become a problem for some farmers. Since 2018, the Regional Investment Corporation has delivered $45 million worth of low-interest loans in Tasmania. Laurissa Smith asked Melanie Monico which farm businesses can apply.
MELANIE MONICO: RIC is a national lender on behalf of the Australian Government. So, we have been talking to farmers here today about our low-cost loan program which includes Drought Loans, AgriStarter Loans and Farm Investment Loans. What we're seeing is that some of our Tassie farmers have experienced some really dry conditions lately. They're coming and talking to us about how a RIC loan might be able to help them to improve their cash flow, with a cheaper interest rate, potentially with us to help them manage through, prepare for the next drought.
LAURISSA SMITH: What are some of the eligibility criteria for that particular loan that you're talking about?
MELANIE MONICO: With the Drought Loan, you can borrow up to $2 million. You need to have 50 per cent of debt staying initially with your bank, which is a commercial loan and 50 per cent can be borrowed with us. You need to be able to show that you're in financial need, that you have significant financial impact from drought. We ask for three different documents when you're applying and that's your financials - we need to see that over time that the drought conditions have affected your business and the money that's coming into your farm. We ask for a cash flow budget, and we want to see Year In, Year Out that you'll be able to get back onto your feet, that the loan will help you over time, and you'll be able to repay the loan over time.
We've seen a lot of dairy farmers and even veggie farmers as well have used our Drought Loan to put in infrastructure, such as pivots to help with water infrastructure and managing through and getting to a situation where they can be more self-reliant, I suppose, and be ready and prepared for the next drought. We also have a new Drought Loan that's just been announced, which is the Drought Hardship Loan. So, it's a loan that if you've been in drought for two years or more, so in a long-term drought situation, you can apply for a loan for $250,000 to help you pay operating expenses. So, just say for example, you need to cart water, or you know, you're managing stock, or you need to sell off stock--
LAURISSA SMITH: Buy feed.
MELANIE MONICO: Buy feed, yes, and pay any operating expenses. That loan helps people to manage through, so it's very much about keeping farmers farming and then getting them into a really good spot so they can move on and carry on with their business.
LAURISSA SMITH: When do you have to pay that down?
MELANIE MONICO. It’s a five-year loan term. So, in the first two years interest accrues, there's nothing to pay in that first two years, so very valuable. And then after year three, you pay your principal and interest from there and the accrued interest from those first two years. Our interest rate at the moment is 5.18 per cent. It's been stable for the last two years, and it's only reviewed every six months. So, that really gives a bit of certainty to farmers as well. In a bit of an uncertain world, with lots of challenges, you know what your payments will be six months at a time. But, yeah, it's reviewed every six months, and the Government will make a decision on that. But it's been held steady for two years, so that's been really welcome for farmers who have our loans.
LAURISSA SMITH: What about for young people who are trying to get their foot in the door? It's very difficult to get into the farming market if you don't have that capital behind you as a young farmer.
MELANIE MONICO: We do have an AgriStarter Loan. It's for first farmers and for succession planning. And as you say, it's a very popular loan. People do look at RIC loans as a pathway into farming. So, if you are a first farmer, you need to be able to demonstrate that you have got farming experience. But you could be share farming, you could be agisting. We need to be able to see that you've got security behind you and that you've got an ability to repay the loan. With that loan, you can have some off-farm income, and we understand that, when you're starting out, you need to have some money behind you. But we are looking for people who are wanting to make a living out of farming. So, that's all part of the eligibility criteria.
With succession planning as well, with an ageing population of farmers and a lot of young people wanting to come back to the family farm, they're looking at succession planning arrangements, and a RIC loan might be able to help through the AgriStarter loan program as well.
LAURISSA SMITH. So, could you use a loan like this to purchase land?
MELANIE MONICO: Yes, you can, if you meet the eligibility criteria and you've got security behind you. Or, you know, sometimes we see Mum and Dad going guarantor as well. A lot of families might be buying the neighbouring property and expanding and sometimes that's a pathway for the children to be buying the neighbouring farm and coming in that way as well. So, different scenarios with that one, but it's one of our most popular products.
LAURISSA SMITH: What's the uptake been like for RIC loans elsewhere in the country?
MELANIE MONICO: We have had a lot of uptake from South Australia, Victoria, New South Wales in particular. Their drought conditions have been prolonged. That's another one of the reasons why our Drought Hardship Loan has been introduced by the Australian Government because that is to help people with operating expenses and to manage through.
We have had farmers from Tasmania take on our loans, but probably more prevalent recently from those areas that I've just said, because their drought has been very prolonged and they haven't necessarily had much rain at all.
Whereas some areas potentially in Tasmania have had sporadic rain here and there. That gives a bit of a green drought. Other areas are very dry, unfortunately, and we're seeing that more and more. Northern NSW, Western NSW and obviously Southern NSW as well. There's been a lot of interest in our loans.
RIC loans aren't for everyone. We ask people not to self-assess. We ask to have a conversation with our team. Our team is very helpful. We've got a 1-800 contact centre number but our website also has lots of tools, guides, document checklists, information that will help you to understand if a RIC loan is right for you but then also to understand what you need to apply. This includes what documents you need, what you need to think about and if you're a little bit unsure, talk to your accountant, talk to your trusted adviser or your rural financial counsellor. We work closely with them, but give our team a call as well because we'd be happy to talk about your individual situation.
We know farm businesses are very bespoke, very individual. Your situation might be very different to someone else's. We just ask you not to self-assess, always have a conversation because that conversation could lead to a RIC loan and might actually help you to improve your cash flow and get you into a better position in the long term.
TONY BRISCOE: That's Melanie Monico from the Regional Investment Corporation talking now to Laurissa Smith about RIC loans.
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