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Agrifinance a boon for SME brokers

by Francesca Krakue4 minute read

One successful regional broker has emphasised that right now is one of the better periods for brokers to tap into the country’s thriving agricultural finance market.

Speaking to SME Adviser, Brad Sewell of Robinson Sewell Partners said that finance brokers are becoming increasingly important to and popular among rural businesses and farmers.

“There are more brokers coming. Just in the last 12-18 months there has been a relatively marked increase in the number of people coming into the agribusiness market,” he added.

According to Mr Sewell, agriculture accounts for approximately $60 billion of lending, having seen some “fairly significant” increases up until two to three years ago.

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“With this big harvest that we’ve had, you will probably find a bit of debt will be paid off in the next three or four months, which is paying back a lot of the debt that was accumulated in the last two or three years due to drought and farmers needing more money to carry on… so a lot of farmers are paying that debt back,” he explained.

He also pointed out that land values in Queensland have increased “quite significantly”, which may lead to an increase in debt associated with land acquisition, but it was from 1995 to 2008 where there were the most significant increases in agricultural debt.

Mr Sewell noted that while it is difficult to generate what the state of agriculture is like at the moment due to the fact that Australia is geographically diverse, it is currently, broadly speaking, “quite a good space to be in”.

“For instance, cotton prices are on the rise, cattle prices are good, sheep and wool are good. Some of the grain prices, like wheat and barley are a bit subdued at the moment, but other types of crops are performing well on the hotter price front.

“Seasonally, a lot of regions in terms of rainfall are looking pretty good. There are always a few droughts somewhere in Australia, which is pretty hard to avoid, but generally speaking the country is performing quite well from an agricultural perspective,” he elaborated.

He added that although the country’s fisheries have “always been struggling” with government intervention in terms of licencing and quotas, and the milk industry has been under some strain over the past year, it is fundamentally “a sound industry”.

“Generally speaking, this would be one of the better periods of agriculture right at this point in time,” he concluded.

[Related: Opportunities for brokers as SMEs are increasingly open to new funding options

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