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Sunday, March 29, 2015

Better banking push for agribusiness, farmers

Better banking push for agribusiness, farmers NIGEL AUSTIN The Advertiser March 28, 2015 12:00AM Chris Block and Michael Bagshaw. Pic by Bianca De Marchi. THE farming and agribusiness sector is being urged to get much better interest rates by taking a more professional approach to borrowing needs. Finance industry specialists Chris Block and Michael Bagshaw believe about 90 per cent of rural and regional borrowers should be able to gain a better financial outcome and improved relationship with their bankers. If successful, the potential rewards are significant for the farm sector, regarded by the nation’s banks as one of their major growth segments. Farmers owe large financial institutions $65 billion, double the amount of the mining sector, but they pay much higher interest rates than the housing sector. Mr Block, a former National Australia Bank managing partner in Adelaide, said that borrowing money is one of the main costs in farming. He believes that interest rate savings of one to two percentage points is not out of the realms of possibility and offers major gains for the farming sector. Finance is the second largest cost after fertiliser for SA farms where the average debt of broadacre farms is $484,000, according to the Australian Bureau of Agricultural and Resource Economics and Sciences March Agricultural Commodities report. Mr Block and Murray Bridge businessman Mr Bagshaw formed Capital and Wealth Partners, based in Kent Town, to help country clients enjoy the same benefits of financial industry competition that is enjoyed by city businesses. “There is an enormous opportunity to save money for businesses operating in rural and regional Australia,” Mr Block said. “We’re targeting a genuine services gap in the country compared to what is available in the city. “Financiers have historically enjoyed and leveraged loyalty in the country as a key means of servicing rural clients, while engaging in aggressive new client acquisition and client retention programs in the city.” Mr Block said agribusiness is a fertile area for the finance sector because it is one of the two key Australian industry segments recognised for its significant growth potential. He has recently completed banking reviews for various large agribusiness companies and saved them many thousands of dollars in the first year by rigorously examining their interest rates, fees and charges and by applying readily available financial products and services. “The potential financial benefits for rural borrowers are really quite substantial,” he said. “A key part of our new service will be providing total transparency so that rural and regional clients know the true cost of financial services to their business enterprise.” Mr Block said that his extensive banking background enables him to quickly recognise opportunities to sit down with financiers to both review and update the services being provided to their clients. “It most certainly doesn’t mean moving banks, but it does mean extracting present day efficient and market competitive financial products and services from their existing provider,” he said. “It’s more cost-effective for banks to retain a customer than loose them and we view our work as helping financiers to better engage with their clients, while we are backing ourselves to deliver a material benefit for our clients.” Their aims include helping to link their country clients to more savvy knowledge across the legal, accounting and general professional services sector to provide further benefits. Mr Bagshaw said it means agribusiness and regional business clients will be able to enjoy direct access to a professional knowledge and financial services business network in line with the proactive services available to city businesses. “City-based clients who have an interest in investing in agriculture will have direct access to my professional skill set,” he said. The alliance will also provide access to foreign investors seeking investment opportunities in the agribusiness sector through Mr Block’s longstanding expertise in this area. “The Chinese investing community is huge and there is a large middle tier wealth segment that wants to come here and buy a property,” Mr Block said. “They are particularly targeting the grain and beef sectors and they want scale for the purpose of exporting produce back to China.” Mr Block said their contact base of Chinese investors offers a direct market for their produce that is linked to consumers, providing an alternative to dealing through intermediary traders. “We have a unique offering which we are both passionate about and we are genuinely focused on achieving beneficial financial services outcomes and banking relationships for rural clients.” Mr Block said. He retired from NAB in 2009 after 33 years and then worked in a professional services practice for five years before establishing his consultancy business Corporate Advisory and Business Services in Kent Town. Mr Bagshaw formed Statewide Consulting & Finance in 2004 after a career in farming and provides a range of financial service options to business owners and individuals in regional areas.

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