Queensland’s rural debt has increased – here’s why that’s not a bad thing
12 September 2024
Opinion piece from QRIDA's Economist, John Gillespie
When you read the news Queensland’s rural debt has risen, you’d be forgiven for initially thinking that’s a bad sign for the agricultural industry.
Debt is often thought of as a dirty word because in some instances it can limit your borrowing capacity and put a financial strain on your farm business.
But, as many agribusinesses would know, debt can actually be a good thing because it can give you the economic boost you need to grow and improve your operation.
It’s also important to remember Queensland’s latest rural debt levels reflect a snapshot in time, and like a business balance sheet, they change with a range of dynamic factors.
I recently helped complete the Queensland Rural and Industry Development Authority’s (QRIDA) 2023 Queensland Rural Debt Survey which showed total rural debt has risen to $29.37 billion, up 8.82 per cent from $26.99 billion in 2021.
The Rural Debt Survey tells the story of the financial landscape of rural enterprises in Queensland and there are plenty of good chapters in the 2021 to 2023 narrative.
Firstly, the quality of rural debt measured by A (viable) and B+ (potential viable) has improved from 94.96 per cent in 2021 to 96.35 per cent in 2023.
This means that between 2021 and 2023, more businesses had the confidence to expand or invest in their operations such as through infrastructure upgrades and genetic improvements and had the ability to pay down some of that debt.
As the costs of assets like property and equipment have increased over the past few years, it is not surprising that pri
mary producers have had to borrow more and take on more debt to account for those price rises.
Secondly, the improvement in rural debt quality has in some ways been underpinned by a comparable increase in land values and a 21.35% growth in Queensland’s agriculture Gross Value of Product.
Given Queensland’s large size and diverse climates, different regions have been impacted by a range of different extreme weather events such as floods and bushfires which have impacted their financial performance during the survey period.
Farm business performance not only varied by region, but industry too, due to global economic drivers, markets and farm input costs.
The bottom line – the 2023 Queensland Rural Debt Survey shows there is confidence in most of the state’s agricultural industries to invest in the future.
- John Gillespie, QRIDA Economist
