The rate cut, which will apply to both farm business loans and water infrastructure loans, was announced in a joint statement from the Minister for Finance, Mathias Cormann, and the Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management, David Littleproud.

According to Mr Cormann, interest rate cuts will deliver “considerable” savings to regional clients of the corporation.

From 1 February 2020, “rates will drop to 2.11 per cent for Farm Business Loans and to 1.65 per cent for Water Infrastructure Loans”, he said.

“I’m pleased the RIC is doing the right thing by farm businesses by cutting their rates,” the Minister continued.

He commended the RIC for “continuing to offer meaningful, rural-focused alternatives for finance, particularly during these challenging times”.

Mr Littleproud has also weighed in, indicating that the cut “would put thousands of dollars in farmers’ pockets”.

“A farm investment loan of $2 million would save another $20,000 a year,” he continued.

“This will take pressure off rural communities and make it easier to maintain a farm or business.”

Noting the effect drought is having on many areas of rural and regional Australia, the Minister for Water Resources noted how the RIC is also offering drought loans of up to $2 million – “two years interest and repayment free, and three years interest only”.

He commented that farmers should use the loans “to make their farm more drought resistant or to refinance”.

Calling the loans “an important part of our suite of measures to support drought communities”, Mr Littleproud said “they complement assistance payments such as the Farm Household Allowance that provides more than $120,000 in payments for farming families”.

“We are in this for the long haul and will keep stepping up our response as the drought steps up.”