Rates, Rain and Repayments

What Primary Producers Need to Know

Running a business involves balancing a range of moving parts. For primary producers, that list extends well beyond the farm gate, including seasonal conditions, commodity prices, fuel, fertiliser, livestock, machinery and the occasional equipment breakdown at the worst possible time.

Interest rates are another factor largely outside a producer's control, but one that can have a significant impact on cash flow, profitability and long-term planning. As at 2 September 2026, Australia’s cash rate is 4.35%. The RBA raised rates three times this year before pausing in August. Headline inflation eased to 3.5% in July, but trimmed mean inflation remained at 3.6%, above the RBA’s 2–3% target. Inflation is easing, but it has not wandered back into the paddock.

Small changes in interest rates can make a noticeable difference. A 0.25% increase adds approximately $2,500 per year in interest costs for every $1 million of variable-rate debt, assuming the increase is fully passed on by the lender. While this may not seem substantial on its own, rising interest costs often arrive alongside increasing input costs, placing additional pressure on cash flow.

For many primary producers, expenses are incurred well before income is received. Crops are planted months before harvest and livestock require ongoing feed and care regardless of market conditions. When borrowing costs increase, funds originally set aside for wages, machinery maintenance or future inputs can quickly be absorbed by finance commitments.

Understanding Your Financing Options

There is no one-size-fits-all approach when it comes to managing debt.

A fixed interest rate can provide certainty and protection against future increases, which may be particularly valuable for businesses with seasonal income patterns. However, fixed-rate facilities may include break costs, repayment restrictions and reduced flexibility if circumstances change. 

Conversely, variable-rate facilities offer greater flexibility and allow borrowers to benefit when rates fall, but repayments can increase with little warning. For some businesses, a combination of fixed and variable debt can help balance certainty and flexibility.

The Importance of Cash Flow Forecasting

While nobody can accurately predict future interest rate movements, businesses can prepare for different scenarios.

One of the most effective ways to manage uncertainty is through cash flow forecasting. By forecasting future income, expenses and debt commitments, producers can identify potential cash shortages before they occur and make informed decisions around borrowing, machinery purchases and major capital expenditure.

At Murray Nankivell, we are partnered with Figured to help farming businesses prepare detailed cash flow forecasts and model different scenarios. This allows producers to assess the impact of changing interest rates, seasonal variations and planned investments on their business before making important financial decisions.

Using forecasting tools can provide greater visibility over:

• Future cash flow requirements
• Machinery and capital purchase planning
• Finance and loan servicing capacity
• Seasonal funding needs
• Potential pressure points within the business

Practical Steps for Producers

With ongoing uncertainty around interest rates and seasonal conditions, it may be worthwhile to:

• Review existing loan facilities and interest rates.
• Understand the benefits and limitations of fixed versus variable debt.
• Stress-test your cash flow using interest rates 0.25% to 0.50% higher than current levels.
• Maintain adequate working capital reserves where possible.
• Regularly update your cash flow forecasts throughout the year.

How We Can Help

At Murray Nankivell, we work with you to understand the financial impact of changing economic conditions and seasonal challenges. Through cash flow forecasting, budgeting and scenario modelling using tools such as Figured, we can help identify risks, evaluate opportunities and support informed decision-making.

If you would like assistance reviewing your business finances, forecasting future cash flow or assessing the impact of changing interest rates on your operation, our team would be happy to help.