The Australian Bureau of Agricultural and Resource Economics (ABARES) has highlighted a rise in farm sector debt as farmers continue to invest in land purchases.

In a report released mid-November, ABARES cited data from the Australian Prudential Regulatory Authority (APRA), which showed a 6% increase in agricultural lending during 2022-23, reaching $120.5 billion. Executive Director of ABARES, Dr Jared Greenville, noted that while farm debt has grown, it reflects ongoing investment and confidence in the rural sector.

“Farmers are taking on debt so they can invest back into their businesses,” he said. “We’re particularly seeing more land purchases, showing that the farmers who are taking on higher debt are expanding their businesses.

“The risks of taking on this debt are more manageable as well. Rising land prices have provided farmers with more equity to support higher borrowings, while historically high farm incomes over the past few years in most agricultural industries supported farmers’ ability to service debt.”

Debt distribution among farms remains uneven. In 2022–23, 5% of broadacre and dairy farms—primarily those with the highest turnover—accounted for nearly 40% of total debt. Meanwhile, almost 50% of broadacre and dairy farms carried minimal or no debt at all.

“What is very good to see was the low number of farms in 2022-23 in financial stress due to debt,” Dr Greenville said.

“For example, the proportion of broadacre and dairy farms with relatively low borrowing capacity and relatively high debt servicing commitments was just under 1% in 2022-23, compared to an average of 7% of farms over the last 20 years.

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