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DROUGHT RELIEF Regional Investment Corporation prepares future-ready farms with low-cost Drought Loans Farmers are improving drought recovery, readiness and climate adaptation by accessing a Regional Investment Corporation (RIC) low-cost, long-term loan to better prepare for anticipated severe weather disruptions. Following devastating floods last year in some parts of NSW, Victoria, South Australia and Tasmania, drying conditions may seem a far cry. But the latest climate research suggests El Niño conditions could be ahead, with prolonged periods of dry fast approaching. In addition to the El Niño Southern Oscillation, climate change continues to influence Australian and global climates. RIC Chief Executive Officer, John Howard said the RIC is pleased to be able to support farm businesses to prepare for drying conditions. “The deeply challenging reality of drying conditions isn’t something we want to think about, but farmers know early preparation is key to their business viability,” Mr Howard said. In the coming decades, Australia is expected to experience ongoing changes to its weather and climate, including more heat extremes and fewer cold extremes, decreases in rainfall and a longer fire season. “A RIC Drought Loan can help farm businesses not only to prepare for the next dry season, but for ongoing hotter and drier conditions as they adapt to climate change,” Mr Howard said. “One customer has used their Drought Loan to build two new dams, increase the size of an existing dam and increase water capacity by about 70 per cent. Another family farming business has used their Drought Loan to adapt to shifting market trends and invest in horticultural crops to future-proof.” According to information available on the RIC website, the purpose of the loan is to prepare for drought; manage or recover from the effects of drought. The loan can be used to: Prepare for drought: Prepare for future droughts through measures including water efficiency techniques, accumulating feed reserves. Fund drought management activities: Pay outstanding bills, pay for fodder or carting of water for livestock or produce. Fund drought recovery activities: Contribute to the cost of drought recovery activities including planting and/or restocking (when seasonal conditions allow). Refinance debt: Refinance certain existing debt at our low interest rate to improve cash flow. KEY FEATURES OF THE DROUGHT LOAN INCLUDE: • a longer term of 10 years offering 5 years interest only, followed by 5 years’ principal and interest • a bility for early repayment with no penalty or the option to refinance the remainder back to a commercial bank at the end of the term • i nterest rates essentially fixed for 6months at a time (reviewed twice per year) • i nterest rates determined by the average of the 10-year government bond rate, not the Reserve Bank of Australia cash rate. “RIC loans are designed to back farmers and provide greater peace of mind so agribusinesses can plan and manage their cashflow in advance. We know that 91 per cent of RIC customers reported their loan made drought recovery easier and 89 per cent had greater confidence in the future of their farmbusiness.” Applicants need to meet all mandatory eligibility criteria to apply for a RIC loan, including demonstrating they are in financial need and have existing commercial debt. Unlike a grant, farm businesses also need to provide security and demonstrate their ability to repay the loan. For more information, log on to ric.gov.au/drought. Image: Tim Keegan, CC BY-SA 2.0, via Wikimedia Commons