They are flexible interest-only facilities, which enable clients to opt to pay principal reductions when they choose.
Agribusiness specialist Rabobank has outlined a range of support measures which are being made available for dairy farming clients impacted by the recent milk price reductions.
Rabobank national manager Country Banking Australia Todd Charteris said the bank was providing support to affected dairy farming clients where needed, to assist through the current industry challenges facing export-oriented producers – with the sector impacted by late-season milk price reductions as well as poor seasonal conditions in many areas.
“The current circumstances are putting pressure on many dairy farming businesses, resulting in significant cash issues in the short term,” he said. “We are working very closely with our dairy clients who are impacted to ensure their businesses are in as resilient a position as possible to move through this difficult time.”
Mr Charteris said dairy clients in applicable circumstances may be eligible for a range of support measures, including:
- provision of working capital to support farmers through this current season and help them set up for the next
- adjusting those customers currently structured under Principal and Interest loans to Interest Only loans for periods of up to 12 months (to extend into next season)
- waiving of break costs on early redemption of term deposits
- waiving of establishment fees on working capital loan increases necessary to assist maintaining operations.
Mr Charteris said Rabobank’s Interest Only rural loans were also specifically designed for farmers and offered financial flexibility to help manage through times of difficulty.
“They are flexible interest-only facilities, which enable clients to opt to pay principal reductions when they choose. This is of particular benefit in times of reduced cash flow due to adverse circumstances,” he said.
Mr Charteris said as an agri banking specialist, Rabobank took a long-term approach in dealing with the downturns in agricultural cycles, such as the current one in dairy.
“It is important to understand that prices will improve, and Rabobank’s medium-term forecast for the sector is positive,” he said. “While we are in the midst of a severe downturn in this global dairy super cycle – which has impacted global commodity prices for the past three years – the bank is confident the global market will turn and a price recovery is within sight, although this may take time to flow back to the farm gate.
“Already, we are beginning to see a slowdown in the milk production growth out of the EU – one of the key factors that had contributed to the price downturn.”
Mr Charteris said the current challenges notwithstanding, the Australian dairy sector had strong underlying fundamentals.
“Our view is that our clients, with the support of the bank where necessary, are in a good position to weather the current difficulties,” he said.
“That said, this is an undeniably stressful time for dairy farmers and their families and it is important for them to engage with their bank and professional advisers for support and to develop plans to get through these difficult seasons.”
He urged any farming clients impacted by the current dairy challenges, who had not yet spoken to the bank, to contact their local branch or phone Rabobank on 1800 025 484.