WITH cattle prices having increased significantly over the past 12 months, which has seen the Eastern Young Cattle Indicator climb by 66 percent since July 2014, livestock producers are increasingly turning to specialist livestock finance providers to finance the purchase of stock.
While the higher prices are great news for livestock producers not affected by drought, the price rise does make it harder for feedlot operators and producers wishing to purchase livestock to grow out on pasture to finance the purchase of stock, as a significant increase in funding is required.
Beef Central asked StockCo, a company that has provided livestock finance in New Zealand since 1995 and in Australia since 2005, to explain how specialist livestock finance arrangements typically work.
StockCo Australia was established to meet demand from producers for targeting livestock finance. The company now operates throughout Australia with a focus on feedlot and backgrounder finance, lamb trading and beef and dairy herd finance.
As a specialist livestock financier, StockCo provides up to 100 percent funding for cattle and sheep purchased for finishing, either on pasture or in feedlots.
StockCo Australia chief executive Richard Brimblecombe said livestock finance can help livestock producers to maximise returns from their businesses by providing funding to purchase livestock to take advantage of surplus pasture, or to fill unutilised capacity in feedlots.
The company also provides livestock finance for producers who are expanding via purchase or lease of additional properties, as well as assisting livestock producers to maximise the value of their stock by ‘cash-flowing’ existing livestock.
“We often receive inquiries from clients who have quality livestock and pasture on hand, but need to sell some stock before they are finished in order to top-up their working capital position,” Mr Brimblecombe said.
“StockCo can assist by providing an advance against these livestock, allowing the producer to retain the stock and optimise their value, while providing the business with cash to fund its ongoing operating costs.”
Drought recovery role
The company says livestock finance can also assist those producers currently impacted by drought conditions in Queensland, when the season finally turns.
“While rising livestock prices are good for the industry, it does make it difficult for drought-affected producers to restock when the season breaks, because the amount of capital required to fund the restocking activity may be difficult to secure from traditional sources,” Mr Brimblecombe said.
Finance can be used by producers who wish to establish facilities now for when seasonal conditions improve, so they can begin generating cash flow from their grazing enterprise without impacting their working capital position.
Strategic livestock financing solutions are also complementary to existing banking relationships.
“The banks are very good at providing term loans, working capital, equipment finance and transactional banking products. StockCo only provides strategic livestock financing facilities. Currently financing products of this nature are not offered by the trading banks, and generally we work in very well with clients and their core banking partners,” he said.
Mr Brimblecombe said the company had seen tremendous growth in its livestock financing facilities over the past 12 months.
“We now have more than 400 clients nationally and continue to experience strong demand for our specialist livestock facilities,” he said.
StockCo Australia was formed in 2005 to meet demand from producers for targeting livestock finance. The company now operates throughout Australia with a focus on feedlot and backgrounder finance, lamb trading and beef and dairy herd finance. For more information, click here.
StockCo is a regular advertiser on Beef Central and Sheep Central websites.