States required to help bring in drought package

NEGOTIATIONS between the federal and state governments will now be crucial to ensure drought-stricken farmers across the country will be able to access low interest loans under the Abbott government's $320 million drought package.

Prime Minister Tony Abbott and Agriculture Minister Barnaby Joyce announced the long-awaited package on Wednesday after a Cabinet meeting ran late on Tuesday considering the options.

The package included more generous income support criteria, with farmers with assets up to $2.5 million able to access Newstart-equivalent payments, as early as Monday next week.

It also included low interest concessional loans totalling $280 million, with individual businesses able to secure up to $1 million, or up to 50% of their farm's debt (whichever is lower) through the loans.

While the package has been largely welcomed by producers, the concessional loans may yet suffer from weaknesses in state government-run rural adjustment authorities, who assess loan applications.

The definition of "viable" businesses, particularly in Queensland, remains a sticking point, and the Abbott government has not yet secured agreements from Queensland or NSW.

Many producers already in the grip of the drought have been unable to access more than $500 million in similar loans already available, due to the viability test, as they have little to no ongoing income to meet the criteria.

While Mr Joyce on Tuesday night informed both state governments about the package, the loans will be contingent on meeting the state authorities' viability test.

It is understood negotiations are already underway, but may take some time before it is known how the adjusted federal loans will be delivered to primary producers in each state.

National Farmers Federation chief executive Matt Linnegar welcomed the package, but also raised questions of the details of the viability test and how it would be overcome.

Mr Abbott said he expected hundreds of producers would be able to access the low-interest loans, while he expected thousands to access the income support measures from Monday.

Labor's agriculture spokesman Joel Fitzgibbon said while the package was welcome, he was also waiting to see the details of the viability test.

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