Category: Business

Lamb and mutton forecasts to 2022

Posted on by Caitlin Dearden

Last week we updated the forecast model for annual young cattle prices to 2022 and this week it is the sheep producers turn to get an insight as to what the Mecardo model for the Eastern States Trade Lamb Indicator (ESTLI) and National Mutton Indicator (NMI) indicates for price projections over the next few years.

Predictor inputs to the lamb and mutton pricing models include an annual average A$ forecast, annual slaughter volumes (as outlined by MLA sheep industry projections), an annual climate factor, per capita, GDP levels of key importing nations and sheepmeat export volumes to key destinations.

The Mecardo ESTLI model predicts lamb prices to remain above 800¢ for the next few seasons as growth in offshore demand continues to outweigh increasing lamb slaughter and production levels (Figure 1). The 2020 season is anticipated to see an annual average ESTLI of 874¢, with a potential range of 740¢ to 1000¢ during the usual seasonal spring trough and winter peak. Annual forecasts for the ESTLI for 2021 and 2022 remain robust at 852¢ and 866¢/kg cwt, respectively.

National Mutton Indicator modelling shows similarly strong predictions for the next four years with the forecast tool indicating an annual average NMI remaining above 500¢ for the 2020 to 2022 period (Figure 2). The 2020 season is expected to see an annual NMI of 525¢, with a potential range of 405¢ to 640¢ from the seasonal trough to peak during the year. The NMI for 2021 is expected to average 531¢, easing to 510¢ for the 2022 season.

What does this mean?

A key driver for the robust pricing scenarios presented in both the ESTLI and NMI forecast models is the expected continued steady growth in demand for sheepmeat, particularly from China. Current modelling does not consider a potential surge in sheepmeat demand in the coming seasons, as Chinese consumers attempt to fill the widening protein vacuum caused by the ongoing African Swine Fever epidemic impacting the Chinese pork sector. A scenario of dramatically increased demand for sheepmeat from China would see forecast price levels elevated further.

Alternatively, ongoing trade tensions between the USA and China could see GDP growth forecasts downgraded. Significantly lower per capita GDP growth levels in China and the USA as a result of trade hostilities could hamper sheepmeat demand and see softer than forecast prices, wiping 100¢-150¢ off the annual average forecast prices to 2022.

StockCo announces ground-breaking facility

Posted on by Caitlin Dearden

Australia’s leading livestock funder StockCo announces a ground breaking securitisation transaction for the Australian market.

StockCo has settled with Goldman Sachs a new warehouse facility backed by a diversified portfolio of financing receivables primarily secured by livestock. The facility will be available for 3 years and will be able initially to accommodate up to $150m of livestock receivables subject to pre-agreed eligibility criteria, and will replace a substantial portion of StockCo’s existing senior debt club facilities, with a view to providing a pathway to funding further growth in StockCo’s business. StockCo expects the facility to increase in the short to medium term as StockCo continues to grow its livestock funding business in the Australian market.

StockCo Group managing director Marcus Kight said “We are delighted to establish this facility with Goldman Sachs. We see their decision to come on board as our major funder as an acknowledgment of the important role we play in financing Australia’s livestock industries.”

StockCo Australia CEO Richard Brimblecombe confirmed the rapid growth of StockCo’s business over the past few years. “At a group level a decision was taken to pivot our focus to the Australian opportunity in 2014, resulting in the establishment of the Australian business in a formal sense in 2015. Since that time we have funded the purchase of over $1.4 billion of cattle and sheep by 1,500 customers all over Australia. Drought conditions have impacted our rate of growth in the past 12 months, however we continue to acquire new customers on a daily basis and we are very excited about the growth opportunities that will arise as seasonal conditions improve.”

“The fundamentals for Australia’s livestock industries are very positive. Our national cattle herd and sheep flock are down due to tough seasonal conditions over the past 12 months in Victoria and NSW and longer in parts of Qld. At the same time demand for high quality Australian meat and wool continues to grow. This will be supportive for prices in the foreseeable future and with a return to more positive seasonal conditions StockCo has a major role to play in helping Australia’s livestock producers access the capital they need to maximise returns from their agricultural assets.”

The Goldman Sachs facility is the first securitisation warehouse transaction in Australia consisting of financing receivables primarily secured by livestock. The completion of the transaction marks an important step for innovation for the agricultural financing sector.

For information contact:

StockCo CEO Richard Brimblecombe: 0408 081 465

 

StockCo, me & my bank.

Posted on by Caitlin Dearden

StockCo assists producers to really maximize the capacity utilization of their existing agricultural asset base, and this really drives growth opportunities. We do this by working very closely with the customer and their bank with the view of having some really mutual beneficial outcomes. StockCo does not compete with banks for business or their customers. Stock only provides livestock funding. We only fund sheep and cattle. So, we don’t do term lending. We don’t do equipment finance. We don’t provide transactional facilities. Our core business is simply livestock funding.

StockCo’s goal is to create value for our customers. We look to enhance the relationship they have with their current financier. This is ultimately providing them with a new pathway to increase livestock revenues. And ultimately this will help them deliver on an improved financial performance. StockCo’s facilities do not disrupt or interfere with an existing bank in terms of their security arrangements.

 

How does StockCo assist livestock producers to achieve better outcomes?

Posted on by Caitlin Dearden

StockCo can assist producers emerging from a destocking event, for example, a drought and our facility helps them to return to generating profits really quickly after a favourable weather event. StockCo’s product can assist producers to really maximise the return on their assets and effectively, this provides them with further income or further revenue to help service their bank facilities or growth projects.

StockCo’s funding can help provide additional capital to our customers to help them grow their numbers which assists when acquiring new properties or on the back of a large development program where they’ve increased their carrying capacity.

Another good example of where StockCo’s facility can be really beneficial to our customers is where we have an existing customer who wants to defray an existing fixed cost, fixed operating costs, over a larger income stream or a larger revenue stream. And they can do this a number of ways, whether they go into a leasing agreement to lease further country or agisting further country.

 

How Does StockCo’s Livestock Funding Facility Work?

Posted on by Caitlin Dearden

StockCo sets up essentially an overarching credit limit for each individual customer, and that credit limit is really based on the peak livestock funding requirement of that customer. So once that limit is in place, the customer then makes the decisions around the most appropriate class of stock that they want to purchase to maximize the profit for their business.

Once the customer has then made that purchasing decision, they then simply purchase the stock the way they normally would, using their normal agents or their preferred purchasing channel, and the invoice is presented to StockCo who settle that invoice directly with the vendor or the vendor’s agent. So, when StockCo settles the purchase invoice, StockCo actually claim the GST back and then we charge finance charges on the GST exclusive amount only. We then carry the purchase price through and the accrued finance charges until the livestock is sold.

When they’re sold, the proceeds come to StockCo, we take out the purchase price and the accrued finance charges and we pay the profit out to our customer. And importantly we do that on a per head basis. So, the customer doesn’t have to wait until StockCo’s exposure on those stock has been cleared before they receive any funds. The moment they start selling livestock, we start paying profit out to their bank account.

 

 

Who Does StockCo Do Business With?

Posted on by Caitlin Dearden

StockCo does business with customers in all the major pastoral regions within Australia, and this is for both sheep and cattle and both pasture and feedlot-based operations. StockCo works with existing viable producers who are well supported by their local bank but may be limited to how much they can borrow under traditional bank policies. StockCo’s ideal customer is operating a very good quality property that suits the purpose of the trade and they have strong operational management skills.

 

Meet Hannah Anderson

Posted on by Caitlin Dearden

As the latest addition to the StockCo team, we would like to officially welcome Hannah Anderson into her new role as Business Development Manager based in Victoria!

Hannah grew up on a mixed sheep and cattle property at Tooborac, where she is now based. After graduating with a Bachelor of Business (Agriculture) Degree and Associate Degree of Farm Business Management from Marcus Oldham, Hannah held various roles throughout Victoria working for NAB Agribusiness.

Hannah has a strong passion for agriculture and in particular the livestock industry in southern Australia, which is what led her to StockCo in 2018. She also has much confidence for the future, believing that the ability of our local industry to adapt, innovate and form successful relationships will continue to support a strong and prosperous country with sustainable food security.

In a rapidly changing finance industry of ever-increasing compliance requirements & complexity, Hannah brings extensive knowledge and experience to the table, allowing us to streamline processes that enable growth and confidence from our customers.

Learn more about the StockCo team here. 

Introducing StockCo Strategic Agrifinance: Who we are

Posted on by Caitlin Dearden

StockCo is Australia’s largest specialist livestock financier. The business was actually commenced in New Zealand in 1995. We’ve been operating continuously providing livestock finance products since then in Australia and New Zealand. We really kicked off the Australian business in 2006 and then pivoted our focus to the Australian opportunity in 2015. Since then, we’ve grown our customer numbers in Australia to around about 1500 and our customers are spread right across all of the major pastural and regional areas of Australia. We’ve got about 450 accredited representatives on the ground in regional and rural locations all throughout Australia supporting our customers.

StockCo Australia’s head office is in Brisbane. We’ve got six in the team here in Brisbane and we’ve also got a business development manager in Rockhampton and another in Victoria, and they really support our distribution partners and our direct customers. So between the team on the ground and our 450 accredited distribution partners, we really have very good coverage of the Australian market. Since about 2015 when we really started to focus on the Australian opportunity we’ve advanced now, with well over a billion dollars for the funding of sheep and cattle all around Australia.

 

Meet Angus Creedon

Posted on by Caitlin Dearden

Welcome to our newest team member Angus Creedon, Business Development Manager, based in Rockhampton, Central Qld. 

Angus is originally from Middlemount in Central Qld where his family has a Brahman stud and run a commercial cattle operation. After working on a local property for two years, Angus commenced a degree in vet science in Townsville but didn’t enjoy it, so he moved to Rockhampton and ran his own AI/Preg testing contracting business while also studying an Applied Science (Production Animal Science) degree externally through the University of Qld Gatton.

On completion of his degree, Angus joined Hewitt Cattle Australia at Emerald and then Moura in Central Qld.

Most recently Angus joined Elanco Animal Health as Territory Manager for Central & Western Qld, where he primarily dealt with rural merchandise stores and feedlots within a 400km radius of Rockhampton.

Angus’ hands on experience, combined with local area and market knowledge strengthens StockCo’s ability to deliver high quality, personalised service in Central Qld.

Learn more about the StockCo team here. 

Five Questions with Caitlin Pearlman

Posted on by Caitlin Dearden

There’s no doubt that combining passion, hard work and hands on experience, whilst putting the customer first bodes well when establishing a career in Agrifinance. That’s exactly what Stockco’s Business Manager, Caitlin Pearlman has done and brings a wealth of experience from working in some of Australia’s largest banks and the Agribusiness Banking Sector for the last nine years. Focused on the future, Caitlin has been appointed to continue the growth of Stockco’s business in Australia by bringing technology and innovative processes to assist grazier and feedlot operations access Stockco’s fast and simple livestock finance products.

Your background has been in Agribusiness Banking, what has been some of your career highlights?

There’s been quite a few, but being involved in building an Agribusiness brand and team from the ground up at a regional Australian Bank that didn’t have a specialised, dedicated Agri banking sector. It proved that you don’t have to have all the latest bells and whistles to have satisfied clients. You just need to put the client at the centre of everything you do. Be available, capable and understand their business.

What prompted you to make the move from Agribusiness Banking to StockCo?

Having worked in the Agribusiness Banking sector since 2009 with both the Commonwealth Bank of Australia and Bank of Queensland (with a two year stint in London in between to get the travel bug out of my system) I wanted a change from banking, but didn’t want to leave the agricultural aspect of my work behind. My family run a dry land grain and beef operation in North West NSW and it’s always had an influence on my life and the choices I make.

Having gained insight into StockCo’s business through their relationship with BOQ, I felt their values and business model were the perfect fit and I am very excited to become a part of the StockCo team. I’ve previously worked with StockCo’s CEO Richard Brimblecombe and COO Tim Pryor and knew I was joining an experienced team who have a huge amount of enthusiasm for StockCo.

What do you hope to achieve in your role as Business Manager for StockCo?

It’s a multifaceted role and I’m sure it will evolve as I settle into the position. I’m hoping to cast a fresh eye over current procedures and compliance practices to see if there’s anything that we can streamline or any valuable data we can extract. Development of an online portal StockCo’s customers can log onto is also high on my agenda. I’ll be working with Tim, Richard and our distribution partners to help take StockCo to a level where every grazier and feedlot operation in Australia associates the StockCo brand with a fast and simple livestock finance product. They will know we can work alongside their existing bank to free up working capital to help them to concentrate on building equity or perhaps expand, whatever their plans may be.

It’s an exciting time for Australia’s livestock industries, what do you see as the biggest opportunities and challenges?

The entrance of the next generation into the livestock industry is a complex challenge. With land ownership structures changing and corporations seeing value in agriculture the barriers to entry are high. Traditional banking finance is struggling to evolve with the more economical option to lease land instead of owning it. That’s where I see StockCo coming into play, helping the younger generation get a foot in the door with livestock finance.

In terms of opportunities, technology is the buzz word of the agricultural industry. The use of drones to measure pasture biomass, NLIS, real time tracking of weights, movements, grazing habits along with software packages that analyse this data alongside the business accounts. When used effectively they allow livestock producers to maximise their productivity and returns.

What advice would you have for a university graduate who is passionate about Australian Agriculture and is looking to establish a career in agribusiness?

If you’re already passionate, then half the work is done. Show people in the industry your passion. Start networking. Polish up your LinkedIn profile. Start connecting with people in the industry. Don’t know what area of agriculture you want to be in? Apply for a variety of graduate and entry positions. Don’t be fussy. Going through the application process is valuable experience. If you are offered a position you really don’t think is suitable, you can always say no. Banking graduate positions are a very good stepping stone as they not only expose you to a myriad of different agricultural industries (aquaculture, horticulture, cropping and livestock to name a few) but you also get exposure to the different areas within the Bank.

Can’t land that coveted graduate position? Get a year’s hands on experience on a property or look for seasonal positions within your Government’s Department of Agriculture. I had a job during the summer break collecting heliothis moth eggs in cotton crops, another summer I was working for an agronomist. Volunteer your time, do extra jobs on the side. You’ll stand out in the next round of interviews by showing your entrepreneurial side and that you’re willing to put in the extra effort to land the position.

Learn more about the StockCo team here.