20 Jul THE FINANCIAL REVIEW: Interviews RSP and clients Ann and Michael Coughlan
The Australian Financial Review (20th July 2015 : page 33) has exclusively interviewed Ian Robinson, director of Robinson Sewell Partners, to provide a granular insight into the activities of savvy farmers strategically positioning themselves to renegotiate stronger financial funding platforms for their respective businesses. Being agribusiness finance specialists, Robinson Sewell Partners has detailed why farmers are focusing on this aspect of their business and what they seek to achieve out of the process. It is clear from the commentary that the economic results fall truly in favour of the farmer.
Australian Financial Review 20th July 2015
By: Matthew Cranston
Australia farmers are reconsidering their loyalty to banks, bringing more beneficial lending terms and saving hundreds of thousands of dollars.
Agribusiness finance specialist Robinson Sewell Partners has negotiated $325 million in loans for clients in just four years and says the growth in its business is just beginning as the traditional farmer becomes more aware of the increasing number of lenders and borrowing tactics.
Its clients include cattle breeders Michael and Ann Coughlan, whose Tarabah Livestock business owns 5000 head of cattle near Holbrook, south of Wagga Wagga. They have been buying rural properties in southern NSW including the recent multimillion dollar purchase of nearby Tiverton station.
“We have bought a lot of properties in the past 10 years and we have borrowed to do that,” Mr Coughlan said, “And you don’t have to get a much better [borrowing] margin for that to be worth a lot more money to you.”
He said having a former banker help guide him through his options with his current bank made the process considerably easier.
“It’s been like walking into a room that is less like a David and Goliath situation,” Mr Coughlan said.
He said the whole industry was changing as more choice was being created.
“I don’t know if rural businesses are as loyal to their banks as they used to be. In fact, I think the whole industry has become a lot more fluid in making decisions – they are much more likely to go to the lowest cost provider.”
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Australia’s broadacre debt is estimated by to have remained largely unchanged during fiscal 2014, averaging $512,500 a farm in June last year, according to government research body ABARES. Total rural debt sits at more than $60 billion with about $25 billion wrapped up in farmland ownership.
Robinson Sewell Partners director Ian Robinson said his business had never been so busy and he was now looking for bankers to join him.
“Having negotiated on $325 million in loans, we represent just 5 per cent of the market so we are only just warming up,” Mr Robinson said.
He said knowing which bank a farmer should approach in the banking system was critically important.
“Creating healthy competitive tension via a formal tender process drives good corporate governance to ensure the client can make a rationale decision as to which is the best bank for their business.
“The financial success of this process is tangible and measurable,” he said. “The economic savings then becomes an annuity which flows straight to the client’s bottom line as additional profit, year in year out.”