Whither the lender of last resort?: The rise and fall of public farm credit in Australia and New Zealand

Public farm financial institutions were established in 20th Century Australia and New Zealand to facilitate agricultural and rural economic development. This arrangement reflected agricultureʹs economic importance, and rural societyʹs political importance to both countries until the early 1980s. With both countries’ adoption of monetarist principles (including financial deregulation and the drive for smaller government) from the mid-1980s these public farm credit providers were seen to distort the allocation of farm credit and to be an inefficient use of public resources. Deregulation would, according to its many proponents, remove these distortions and create a free market for farm credit which would deliver the most appropriate loan packages for both countries’ farm sectors. The extensive literature on the New Zealand experience of farm sector restructuring and primary research into the South Australian farm crisis of the late 1980s and early 1990s show that the commercialisation and/or abolition of public farm credit providers in both countries has fundamentally restructured the farm credit market but failed to address many farm families’ demand for concessional, long-term finance. The research also demonstrates the continuing need for local and regional case studies of the impacts of and responses to major institutional restructuring that are both theoretically informed and scale sensitive as a means to building a genuinely international literature on contemporary rural and agrarian change.