VICTORIAN farmers have been left with more questions than answers following the release of the Federal Government's Farm Finance package application forms.
To apply for up to $650,000 in concessional loans - set at an initial interest rate of 4.5 per cent - farmers must provide a five-year business plan that incorporates forecast cash-flow adjustments, planned productivity increases or debt reduction plans.
Rural Finance operations general manager Peter Nee said application costs would be incurred by the farmer but there was help available.
"We're not after 50-100 pages of documents," he said.
"We're communicating to farmers they can do it themselves, they just might need help from someone to fill in the finer details."
A key focus of the five-yr plan would be long-term viability, with farmers tasked to show what methods are in place to carry the burden of extra debt.
"An example of this could be a farmers plan to increase from 500 milking cows to 750 milking cows that will support the debt in the future," he said.
At least one member of the farm business must be a farmer who contributed at least 75 per cent of his or her labour and derived at least 50pc of his or her income from the farm business.
Mr Nee said the application requirements were designed to help full-time farmers operating commercial-scale businesses.
"The 50pc gross income requirement refers to a normal trading year, which can be quite hard to define for some farmers," he said.
"In a tough year like this one if farmers have gone off-farm to generate income then that will be taken into consideration."
He said the concessional loans would target family-run farms, not corporate-style farms with other business interests.
"Farm businesses that are more of an investment will not be eligible for the farm finance package," he said.
Coffey Hunt agribusiness partner Garry Smith was concerned the current guidelines had moved away from the original aim of the package, which he said was to provide short-term cash for those in financial difficulties.
"The guidelines say Rural Finance want financial security to be handed over to them from the farmers' banks," he said.
"A lot of farmers I have spoken to said there banks are reluctant to do this."
Mr Smith said for the arrangement with banks to work, Rural Finance would have to take on a second mortgage to secure finance.
Mr Knee said RFC would accept second mortgagor positions where there was adequate value in the assets to cover the borrowings based on their assessment.
Overdraft facilities are also considered ineligible for finance, which Cooriemungle dairy farmer Kim Clough said was a "complete waste of time" for producers in her area.
"It (concessional loans) might help some of the big farms, but all the smaller farmers around here wouldn't be eligible," she said.
Mrs Clough, who has a couple of loans at a fixed rate of 7pc, said it would cost more money to break the loans to get the finance.
"It just wouldn't be worth it," she said.
Mr Smith said many farmers he had spoken were paying the highest interest rates on their overdraft facility.
"If farmers renege on existing loan agreements, they'll be penalised," he said.
Concessional loans in Victoria are available to refinance farm business related debt that has been accumulated at commercial interest rates.
Mr Knee said Rural Finance had received more than 400 inquiries from farmers and associated parties since the Federal Government announced the plan on July 12 - 30pc of which came from dairy farmers in the State's South West.
