Australian Farm Funding Guide 2023

Farming is a family affair. According to the Australian Government’s Department of Agriculture and Water Resources (ABARES), 95% of Australian farms are family owned and operated. The desire to keep the farm’s ownership within the family, limits the sources of funds available for expansion, investment or equipment to funding types that retain the family’s control of the business. In addition to funding restrictions, small to medium-sized Australian farms operate with tight margins and returns on capital of only 2-3% excluding capital appreciation. With such narrow margins, efficiency in all aspects of operations is key and it is important to structure any debt taken-on efficiently and economically. This guide discusses the main types of agrifinance available to farms including bank borrowings, equipment finance and government-subsidised loans.

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Why use equipment finance?

Every farmer will tell you that owning the right farm machinery and equipment is key to keeping a farm productive and therefore profitable in both the near and longer term.

Technology has transformed agriculture and brought huge improvements in efficiency and productivity. It has also made farming a much more capital-intensive industry and sizeable investments are required to keep the equipment and machinery stable up to date and functioning well. Over 55% of Australian farms had net additions to their farming equipment in the 2018 financial year according to the ABARES Australian Agricultural and Grazing Industries Survey. In fact, spending on farm equipment and infrastructure has grown by 2.8% per year for the past 20 years.

The list of machinery and equipment necessary to run a farm is extensive and includes:

  • Tractors
  • Combines
  • Ploughs
  • Trailers
  • Harvesters
  • Generators
  • Conveyor belts
  • Grain carts
  • Seeders
  • Fertilizer sprayers
  • Bale feeders
  • Cattle guards
  • Cattle crushers
  • Livestock feeders
  • Milking equipment
  • And more depending on the type of agriculture you practice.
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