Sebastian Calderon, Murray Pioneer

Riverland farmers are being urged to look closely at South Australia’s newly opened drought loan scheme, with Riverland Lending Services agribusiness (RLS) senior manager Jeff McDonald warning the concessional finance could bring both short term relief and long-term complications.

Applications have now opened for the South Australia Drought Loan Scheme, offering eligible dryland cropping and livestock businesses in the Riverland loans of up to $250,000 over 10 years, with no repayments required for the first two years.

Mr McDonald said there had already been debate around both the timing and intent of the scheme.

“There has been a fair bit of commentary that this loan scheme is more a political game than what’s real and needed by the farmers,” he said.

“One could argue there’s substance in that claim given it was most needed straight after the disastrous 2024 season, but was only promised in the lead up to the recent State Election and delivered now.”

Mr McDonald stressed the program’s eligibility was narrow and would fail to cover many local producers.

“It must be noted that it is only available for dry-land cropping and livestock businesses in the Riverland and northern Mallee, not irrigation businesses,” he said.

The PIRSA-backed scheme is being administered through QRIDA and requires mortgage security over farming land and associated water entitlements, a point Mr McDonald said could become one of the biggest practical hurdles.

“The biggest issue that may occur in the future, is the compliance and paperwork associated with the government wanting mortgage security,” he said.

“Most farmers in the Riverland don’t have unencumbered property they can throw in as security, it is nearly always fully mortgaged to their bank.”

He said the creation of second mortgages could affect a farmer’s ability to access future support from their primary lender.

“This scheme requires mortgage security, so creating second mortgages also creates significant compliance and administration on an ongoing basis,” he said.

“As farmers have experienced with Regional Investment Corporation (RIC) loans, having a second mortgage can lock down the bank’s ability to help if things got tougher in the future.”

Mr McDonald also questioned how the loans would interact with existing responsible lending rules and whether they would genuinely provide an option where commercial banks had declined finance.

“I will be interested to see if these loans will be assessed under the current Responsible Lending Laws,” he said.

“If so, then there will not be any loans approved outside of what a farmer’s bank would approve. In other words, this would not be the option when the bank says no.”

Mr McDonald acknowledged the concessional rate and repayment holiday would be attractive.

“In other words, a farmer can access up to $200,000 and pay nothing for two years,” he said.

“Having said that, I would recommend all farmers investigate the opportunity and discuss it with their bank or broker to understand what would be involved.”

Mr McDonald’s warning highlights the need to weigh immediate relief against future financing flexibility.

This article appeared in Murray Pioneer, 15 April 2026.