Finance opportunities for young farmers with their first property purchase

Beef Central, 17/08/2022

Young cattleman Cody Scott has bought his first block near Inverell, under a Future Farmers Program loan

NAB’s Future Farmers program is making it easier for younger farmers to buy or lease an agricultural property, and Cody Scott is one of the first to benefit.

NAB introduced the Future Farmers program in early 2022 to help young farmers access the agricultural property market by providing more flexible loan structures including potential for reduced equity requirements, longer repayment terms on a case-by-case basis, and personalised business banking support.

Property prices across all classes have seen significant growth in recent decades, however the trend is particularly noticeable in agriculture. The shift towards aggregated properties also makes it difficult for first-time buyers to find a smaller property.

Since 1990, the average value of farms, including land and fixed improvements, has increased by more than 220 percent, while the number of farms under $500,000 has decreased by 54pc.

Neighbour-to-neighbour acquisitions under $25 million are the most active segment of the rural property market in Australia, according to NAB’s inaugural Regional & Agribusiness Horizons Report released in May.

While there is no shortage of aspiring producers with the experience, know-how and drive to do well, they’re finding it increasingly difficult to tackle this property market and follow their farming dreams.

Cody Scott is a perfect example. During his established career as a livestock and property agent, Cody has built up a herd of about 250 head of cattle, run on leased property.

Now 27, Cody is transitioning his business to the next level with the purchase of a 539ha property near Inverell, NSW, to use as a grass finishing operation.

“It seemed the only way to get into it these days, is to be born in a family that’s already got the country, or marry into it,” Cody said.

“But the Future Farmers program that NAB’s running is giving the younger generation opportunities to do exactly what I’ve done, so I’m very lucky.”

Cody has used a Future Farmers loan to purchase his property, as well as materials for improvements.

He has also transitioned his herd off a private financing model. He expects that consolidating his finances with NAB will continue to save him money and make running his business easier.

While Cody may think of himself as “lucky”, he hasn’t stumbled into his position.

“I was pretty well raised on the land and always had a passion for it,” Cody said.

“I started leasing two properties, which has given me a start in building up herd numbers and generating an income. Now I can value-add on what I’m already doing through fattening or cropping and see the program the whole way through.

“I’ve also got an off-farm income that comes through a buyers and property agency business,” Cody said.

“The experience of being an agent is a massive help because I can understand the greater scheme of things: trading, operating on every level – I see it throughout my own business and also through clients.”

While Cody has certainly worked hard for his success, he says his story is fairly typical for younger farmers.

“They’re still hungry to get on the land. I see a lot of people now that are stepping into it through a different path, like I’ve done,” he said.

Starting up an agricultural business, according to Cody, is one potential pathway to getting into the industry with a view to settling on the land more permanently, but it’s also “a very rewarding job.”

“Financially rewarding, and also in that you’re your own boss, that you have control over your own business,” he said.

“We’ve gone the way of livestock, but others are going out there and doing contract farming. They’ve bought spray rigs that are worth $500,000, tractors that might be worth $100,000, and so that’s the way that they are building up their assets.”

While some might be nervous about taking the leap with such a big investment, Cody said that market conditions were right for expanding his business.

“The way that land prices are going, the global shortage in protein, they’re not coming off in the short-term,” he said.

“Of course, agriculture is always seasonally dependent. If the cattle market takes a turn, we’ll have a look at doing a grain crop. There’s a risk in anything, but I don’t think it’s a risk we can’t control.”

For Cody, the biggest asset to a business is being able to back yourself.

“The way I look at it, it’s a long-term investment in a person. What we’re doing, and what NAB’s doing, is trying to support the younger people with experience, who have a bit of an idea what they’re doing.

“You’ve got to have a goal set in mind. You’ve got to know what it is you want to do, knuckle down and have a crack at it.

“I would 100 percent recommend the Future Farmers program. It’s giving the younger generation an opportunity to get on the land.”


Source: NAB




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