Discount farm sector money lender, Regional Investment Corporation, is handling a rising tide of inquiries from farmers needing funds to get their businesses back on track in the wake of multiple flood emergencies in the past two years.
About 70 local government areas from northern NSW to Western Australia's North West have been impacted by flooding since mid-2021.
Some farming areas, particularly in eastern Australia, were subjected to many months of extreme wet weather strikes which claimed livestock, crops and farm infrastructure, while numerous unlucky operators copped repeated years of soggy crop failures and stock losses.
With mainstream interest rates constantly climbing and taking rural lenders' typical costs to about double RIC's loan charges, the federal government-backed lender has attracted fresh attention.
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Although many farmers will fondly remember the past few years for the run of generally abundant seasons and welcome cash flow rises which followed a nasty period of prolonged drought, others have experienced too much of a good thing.
The rain didn't stop and earning opportunities sank.
"If you can demonstrate significant income loss over a two-year period, triggered by natural events, a farm investment loan could be the financial support you really need," said RIC chief executive officer, John Howard.
RIC's 10-year loans are not only cheap, but come with no lending fees or charges, and the repayment schedule is interest-only for the first five years.
Mr Howard said the past year's big wet left many farmers now emerging from the initial shock and clean-up phase badly needing money for restocking, rebuilding fencing and repairing damaged dams, paddocks, infrastructure and equipment before they could get enough cash flowing again.
Debt refinancing
Others were looking to RIC's attractive 4.52 per cent interest rate loans to help refinance existing debt on more manageable terms as rising commercial loan rates squeezed their spending options.
RIC loans - of up to $2 million - also include the popular AgriStarter option for younger, or next generation, farmers.
The AgriStarter Loan is notching up its second anniversary as a low cost finance offering for farmers establishing an operation, or taking over their family's existing enterprise on their own.
The appetite and need for finance to assist succession planning is alive and well
- John Howard, Regional Investment Corporation
More than $36m have been lent to about 44 AgriStarter customers, with many more applications in the pipeline and a steady stream of inquiries coming from people contemplating farm succession choices.
"The appetite and need for finance to assist succession planning is alive and well, and looks like being strong for a long time," Mr Howard said.
AgriStater borrowers, who must have proven farming experience to qualify, were primarily using funds to buy livestock or land.
Loans to cover machinery purchases for sharefarming or leased farmland ventures were also common.
Loan partnership
All RIC lending occurs in partnership with a commercial financier's loan which must represent at least half of the total package.
Although interest rates for the commercial lender's portion of the loan package are subject to shifting with the Reserve Bank of Australia's monthly cash rate settings, RIC's interest costs are only reviewed six-monthly, based on movements in government bond rates.
Despite 12 consecutive RBA rate rises in the past 13 months, Mr Howard said there had been no slowdown in the number of RIC-partnered loan applications received or approved.
Overall, across its various lending categories, which also span drought, plantation and agribusiness loans, RIC has paid out more than $3.1 billion to about 2890 borrowers since its opened its doors in mid-2018.
In flood affected areas, the regions now generating a surge of applications or inquiries included Queensland's South Burnett and Darling Downs, NSW's savagely impacted Northern Rivers, the Lachlan Valley and other parts of Central West NSW, and both sides of the Murray River in NSW, Victoria and South Australia.
Mr Howard said some weather-related earnings setbacks had resulted from a combination of crop and stock deaths caused by flooding and extended wet periods - and incomes were quite likely to still be suffering.
Earnings setback
"If you lost breeding stock last year and can demonstrate that earnings will continue to be impacted for a second year, or longer, before new calves or lambs have grown, you may qualify for a low-cost loan option to support your farm business recovery," he said.
Mr Howard recently visited new RIC customers on the NSW North Coast, also encouraging others to familiarise themselves with farm investment loans as a recovery option if they were affected by flooding, or any other natural disaster or financial downturn outside their control.
"We understand unpredictable events, such as natural disasters, biosecurity risks and market closures can have a devastating impact on farm livelihoods," he said.
"RIC loans are specifically designed to help farmers recover and rebuild their businesses to be more resilient and profitable for sustainable growth."
Farm sector accounting firms and financial advice specialists such as NSW's Northern Region Rural Financial Counselling Service have directed a big number of flood-related inquiries to RIC.
Chief executive officer Gary Goldberg, said RIC's offering was a useful tool for those meeting the eligibility criteria, particularly for refinancing existing debt, or replacing assets.
It was also worth considering to fund preparations for future natural disasters or other potential market disruptions.
NSW North Coast dairy farmer and Kyogle deputy mayor, Thomas Cooper, became a keen supporter of RIC's low cost loans after borrowing funds to give his family enterprise a cash boost and some breathing space during the recent drought.
"Knowing we had finance secured through RIC has certainly helped us sleep easier," he said.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
