The agricultural sector in Australia is a $100 billion industry and a vital sector of our economy which contributes more than r 10% of our National Gross Domestic Product (GDP), feeding our own population as well as exporting produce overseas.
Lending for rural and agricultural purposes is a highly specialist form of lending, with high degrees of seasonality from season to season as well as from year to year. No other industry is impacted by nature to the degree agriculture is with droughts, floods, pests, and diseases all having significant and sometimes catastrophic impacts which are largely outside of human control.
Lenders in this space have decades of experience in the challenges facing our rural communities, and it’s important to partner with a brokerage who has the same level of understanding.
Types of Rural and Agricultural Lending
Land and property loans:
While there are a large range of lending options for rural zoned property up to 200acres/80ha for non-income producing or lifestyle properties, once a property is deemed as income producing or over 200acres/80ha it will fall outside standard residential lending policy and products. At this point the lending policies and products will be designed specifically for the agricultural sector and will vary depending on the type and size of the agricultural enterprise as there are circumstances which are unique from farm to farm.
Agribusiness lending:
Agribusiness lending covers a broad range of lending to primary production businesses and are often structured around the unique needs and requirements of the individual business.
While some challenges are shared by all in a particular area of the agricultural industry, some are very specific to an individual operation.
The finance requirements of a cattle farmer will differ to a poultry operation or a grain farmer, so it’s important that the lender has a deep understanding of how your business operates.
The terms on most agricultural loans have flexibility around the timing of needing the funds (such as restocking, sowing, and harvesting), and on the timing of repayments (when stock and produce are sold). They can provide additional flexibility around market conditions and the impact of nature on operations, as well as access to additional funding requirements to assist in managing unexpected circumstances.
Equipment Finance:
Equipment can range from light to heavy machinery and includes tractors, harvesters and harvesting equipment, ploughs, cultivators and harrows, mowers, seed drills and spreaders, sprayers and spraying equipment, spreaders, balers, trucks, trailers and other vehicles, irrigation equipment and machinery.
With advances in technology moving quickly in the agribusiness sector there is an increasing use of robots, drones, sensors, imagery, and GPS products to improve productivity and reliability of production.
Livestock and crop funding:
Livestock and crop funding allows farmers to secure funds over existing stock or crops, or to purchase new stock and plant new crops.
This type of lending is very specialist in nature, is more expensive, and comes with a higher degree of risk as many environmental and market factors can impact expected returns.
This type of lending usually requires repayment of the debt in full at time of sale of the stock or produce.
Most farming operations will require a mix of all these types of loan products to run their business, and it’s essential to get the structure of these products right. Farming is stressful enough without the addition of the financial pressures from not having the right loans to support your business.
Why Choose Bell Partners Finance?
Bell Partners Finance has deep roots in Australia’s agricultural sector. Our Managing Director (Mark Stevenson) grew up in the Central West of NSW on a 2000 acre property where his family ran a registered Shorthorn cattle stud as well as Merino and Tukidale sheep.
His family was integral in establishing the carpet wool industry in Australia and owned and operated one of the largest wool brokerages in New South Wales.
He spent every weekend and school holidays working on the family farm, helping collect wool from local farmers, at stud bull auctions, and at the wool markets in Sydney.
Bell Partners Finance operates its rural and agribusiness lending head office out of Tamworth, NSW.