Our Thoughts

Farm Finance

Inflation and working capital

A bank note shot from an angle resulting in a nice blur. In 2021, disruptions in supply chains and increasing inflation have made headlines across the world. These disruptions in the supply chain are having two impacts; increased cost of production and few goods available for people to buy. The flow on from this is an increase in price for goods, which is driving inflation and why the recent US CPI increase is at an almost 30 year high. Australia...

When it comes to bank finance preparation is vital

If you want to be able to buy the right place in today’s property market you need to be organised and prepared. When working with our top clients who intend to buy farmland in 2023, we start working with them in early 2022. This is because the current seller’s market with land prices rising significantly across all markets in recent years have meant success relies on a person being prepared and agile to be successful. Considering settlement is around 40...

Getting Farm Finance While Retaining Female Breeding Stock

Getting farm finance while you’re growing your breeding stock can be challenging. This period typically doesn’t look great financially because you lose potential income when you hold back female stock to increase your herd/flock or have higher costs if you opt to buy new livestock. Despite this, it’s not impossible to get farm finance if you do your homework. Many of our clients have difficulty getting farm finance during this time. However, with these simple tips, you can show your...

The Pros and Cons of Livestock Finance

Livestock finance is a helpful way to buy stock to take advantage of a market when you may not have the cash flow on hand. This flexibility to purchase livestock at the right time is also an intelligent way to make decisions when needed to make your operation more profitable. There are other benefits: livestock finance doesn’t require you to put up land as security. It won’t churn up your cash flow, and it’s usually has a fast turnaround to…

Why the Agri-finance Market is so Inconsistent

You might have chatted to other farmers about finance and wondered why they got a different rate from you even though you have many similarities between businesses. Or maybe you’re getting offered different loan terms between lenders even though you’re giving them the same info. It’s something we see regularly, and fortunately, we’re able to get excellent insights into why these inconsistencies happen through our relationship with lenders across Australia. So why are lenders inconsistent? There are many factors that…

How to make best impression to your bank

There is a lot involved in an Agribusiness loan application. You’ve got to prepare financial documents, pull together forecasts and show your farm can repay the debt. With our experience working with over 20 different lenders, we’ve understood these difficulties and, importantly, what makes the best impression. This article provides tips and hints on the information you need to present to the bank to put you in a strong position. To get there, you need to provide information that falls…

How Equipment Finance Can Impact your Borrowing Capacity

In his 2021 budget speech, Treasurer Josh Frydenberg announced the extension of the instant asset write-off and a lift from $30,000 to $150,000 for new business equipment finance. The extension is good news if you want to purchase a new piece of farm equipment because of the tax incentive it gives your business, but there can be unintended consequences if equipment finance hinders your ability to take on a loan to grow the farm. So the answer becomes a balance…

Interest rates: To Fix or Not?

Don't rush to fix your rates - take the time to do your research No one can predict when interest rates will change, so make the decision based on your farm's financial needs Don't be pushed into a decision. In this month's note, we look at whether you should fix your interest rate or not. Like commodity prices, interest rates rise and fall depending on macroeconomic conditions - none are accurately predicted. You can look for guidance, like the recent...

Raising farm finance in 2021 for Acquisition or Expansion

2020 was a significant year for farming businesses, as we witnessed record number of sales across the eastern seaboard; and saw land values soar to new records. Many businesses saw the opportunity for expansion, however, unfortunately, many potential land purchasers missed out on securing properties as a result of not being properly organised.  Sadly, many were unable to close on their negotiations as they simply ran out of time. Lengthy bank processes and the unchartered constraints COVID-19 presented; found many...

Family Businesses and Succession Planning

Why Succession Planning on Christmas Day is not a good idea

Christmas can be known as much for family barnies as it is for prawns and a leg of ham for lunch, which is why it’s not the time to talk succession planning. The temptation, however, to use Christmas to talk succession planning is strong for many families this year because of lockdowns and an inability to catch up as much as we’d like. Despite this, you should instead use Christmas to build or keep the close relationships needed to make…

Three Traits for a Successful Succession Plan

When it comes to creating your succession plan, many things can lead to its success or failure. After years of sitting in on succession planning workshops, however, we’ve found some common traits that overcome the difficulties to create a successful plan. Kindness and Empathy Showing kindness and empathy, especially when others in the family aren’t or you’re under pressure is tough. However, this is critical in succession planning as it can be a balance of everyone’s goals and ambitions and…

Time to talk mental health and succession planning

As a financial services business you might expect we focus on the numbers and business goals of a farm, but often we find ourselves sitting down with clients who feel lost after leaving the farm. Whether they’ve sold the property or handed over to the next generation we get asked the same question, “what do I do now?” The impact of retirement on mental health is an important consideration that is overlooked by younger generations. A person who has spent…

Getting the succession plan conversation rolling

Stuck, that’s how most of our clients say describe starting a succession planning conversation with the rest of the family. Succession planning is an emotional topic with each generation coming at it from very different perspectives that make it difficult to get the process of succession planning started. Caught up in this is the impatience of the younger generation to take over the farm, and the older generation letting go. But it doesn’t have to be difficult, in this article…

Family Farms remain a strong business model

Despite the talk and headlines related to Australian farmland and foreign corporate ownership, the  family farm remains the dominant business structure in Australian agriculture. There is a good reason for that; families run their farm operation very different to a corporation. One of the great advantages of a family business is its ability to come together, cut expenses and make hard decisions when times are tough. Add to this, a family can act more nimbly than a corporation that often…

Five Tips for Leading a Family Business

Owning and managing a family business can be complicated because you have the added difficulty of managing family members with the day-to-day operations. However, it’s equally a rewarding opportunity as the family work together to build the business you want rather than another’s ambitions. There can be extra pitfalls along the way if you’re the one leading the operation. Sprout Agribusiness has worked with many farming families, and we’ve found a successful leadership style that comes out of these five…

The Risks and Rewards of Working on the Family Farm

Working on the family farm can be very rewarding. Irrespective if you were born into it, married into or work for a family farming operation, you can benefit from all your hard work going back to farm without the formality that comes with corporate employment. However, with the rewards come challenges when something doesn’t go right that causes tension with the family or even see you lose your job. A lot of reward but there can be downside Family farms…

Starting Farm Succession Planning

Farm succession planning is focused on the why, what and when with little emphasis on getting the discussion started. It’s not surprising given the sensitivity around succession planning, but it doesn’t need to be a bad experience if you start in the best possible position. From our starting point, Sprout Agribusiness thinks of farm succession planning as a transition recognising it’s not a process that happens overnight. Succession planning can take years as challenges, goals, and aspirations change over time,…

Striking A Balance Between Rising Farm Asset Values And Compensating Family Members Not Working In The Business

• Treat the farm as a business • Plan for change and handover • Communication is the key to success Most family farms are complex beasts as each generation lays down decisions and operations over time, creating historical baggage along the way. From our experience, successful families manage this complexity by treating the farm as a business with planning a critical part of its operation. Families often consider the operation but don’t think about the tension between siblings who work…

Farms have people issues, not farming issues

Even the closest and most functional family will have rows from time to time. A farming family is no different, and sometimes what can start as a minor issue can snowball into a much bigger dispute that risks the family unity and the farm. This is why working through conflict is so essential to the long-term future of the family farm. In this article, we give you an overview and tips on how to manage conflict on the family farm….

Can the Family Business Afford to go through a Transition?

Cash flow and business analysis are a key part of planning Be realistic about your business goals Compromise You’ve had the first family meeting to talk transition planning, laid out your goals and aspirations for the farm, so what’s next? The next step is to test these goals and aspirations to see if they stack up. When we work with a family to test the viability of a transition plan, we always undertake a deep-dive analysis of the farm’s finances…

Communication and the One-Page Plan

  • Visualise the farm’s goals and aspirations • Identify key dates and put them in a timeline • Regularly review and communicate your transition plan We’ve talked about developing a transition plan and testing it to make sure it stands up, and in this article, we outline how to communicate the plan, so everyone understands it. The first step might sound obvious, but it is essential to write it to leave no room for interpretation. When we bring clients…

Succession Planning: The Family Deal

It’ll come as no surprise that most families have a verbal deal about succession planning: who will take over the farm. These verbal deals go something along the lines of, “the boys get the farm, while the girls get the house in town and the super.” But life happens; children grow up, move away, get married and perhaps end up in a business of their own that make these informal agreements obsolete. Instead, we suggest a plan that changes with...



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