“At the beginning of the year I received a referral from the Services Australia (formerly Department of Human Services) for a family located in the Western area. Over the past 6 months I had been working with this family who operate a mixed farming business. Their primary activity is beef cattle with some winter cereal cropping to help support the main enterprise. Like many farmers in the area over the last few years, they have been faced with the difficult decision of whether to retain livestock and feed, or to de-stock in order to reduce their operating costs. My clients took the decision to retain stock and absorb the increased costs of feeding into their operating budget.
Our first meeting took place at their property and initial discussions revealed that there was pressure from lenders including the NSW Rural Assistance Authority (RAA) to refinance and/or consolidate debt. Their primary lender had put a stop on their Overdraft and the clients were seeking assistance to access working capital in order to continue to feed livestock.
From this meeting, we developed several short and long-term strategies to assist them. A prioritised action plan was developed, with strategies to restore working capital being the most important. Budget projections were submitted to their lender, with a detailed plan to bring accounts back within arrangements. After some negotiations, working capital was restored through the temporary increase of Overdraft limits on the assurance that penalty rates would not be applied.
The second action item was to prepare a submission to the RAA for an extension on the clients Concessional Loan. After the provision of information, the RAA agreed to extend the term of the loan for an additional 12 months giving the clients time to seek refinance.
The next step was the completion of a Regional Investment Corporation (RIC) Drought Loan application to refinance the RAA debt and half of the commercial lending onto a subsidised loan. Through work that had already been done for their lender and RAA, this process was able to be completed quickly. Recently the clients received notification that their application had been approved and are now awaiting funding of the RIC loan.
By following the budget plan and keeping the lines of communication open with their lenders, the clients have been able to sell cattle at optimum times and weight ranges bringing their overdraft back within arrangements. With almost full production levels being restored and a change in seasonal conditions the outlook for the next 12 months is a positive one.
Throughout our discussions on the short-term strategies detailed above, I encouraged the clients to start thinking about longer term issues. We are now beginning to discuss 5-10 year business plans and succession planning. This will hopefully give them some strategic focus to ensure their longer-term future in farming.
These clients represent a typical progression of service delivery. Through addressing the immediate needs of the business, we were able to look at factors that will address the long-term financial and operating viability.
Although there is still a lot of work to be done with these clients, the outcomes so far have been extremely positive.”