It’s a good time to consider your carrying capacity

StockCo website news article

31 March 2023

There’s no doubt the current climate of rising interest rates and increasing costs are putting pressure on
producers’ working capital. However, a softening of livestock prices means that now is a great time to
‘strike while the iron is hot’ and match stocking rate to carrying capacity.

Producers can take advantage of existing conditions and the opportunity to grow by taking their business
to 100% capacity utilisation and maximising their return on assets. This can be done by using capital from
lenders to fund livestock purchases, or by releasing capital tied up in existing livestock. This could improve
working capital and provide capacity for producers to use other funds for property improvement or
acquisition, at a time when rising costs are increasing pressure.

A key ingredient in this type of transaction is the speed of access to funds. A problem many producers
face is they’re either constrained by LVR limitations with their bank, or they’re experiencing long wait
times on finance approvals – sometimes up to 4-8 weeks. This opportunity cost should be carefully
considered given the weight gain that could be achieved over that 4-8 week period if access to funds was

StockCo Chief Executive Officer, Doug Snell said, “In the current climate, producers need to be able to
purchase livestock and have access to money to keep their businesses moving forward. This is particularly
relevant after a significant weather event or following a softening in the market, which presents an
opportunity to buy”.

“StockCo’s approach is to work collaboratively with clients and their banks. By providing specialist
livestock finance facilities, producers can achieve optimal stocking rates with access to funds in the
shortest possible timeframes.

“Funding can be used for herd expansion on leased or agistment properties in anticipation of later
property acquisition to be funded by the bank. Deploying bank funds for capital investment in an existing
property can result in increased carrying capacity, and therefore underlying loan servicing, due to the
higher revenue generated from increased livestock numbers.

“Traditional bank funding is usually provided in a range of 50% to 65% LVR against real estate assets, with
little or no value ascribed to other assets. The benefit of StockCo is that it does not disrupt the security
arrangements held by the bank, but does position the client to demonstrate an improved ability to service
bank debts from increased livestock revenue,” said Snell.

The specialist team at StockCo all have an intimate understanding and deep experience in the Livestock
industry. Specialising only in sheep and cattle livestock facilities, StockCo has the ability to approve
finance at pace, usually within 24 hours.

“StockCo is not setting out to compete with banks. In fact, we work collaboratively with customers and
their banks for mutually beneficial outcomes. We simply provide a fast, effective and complementary
finance opportunity for producers to maximise the value from their livestock operations.

“Our team has a real interest in the land and the agricultural community. We understand that Australian
producers are having to think outside the box and make informed decisions to ease their cash flow pressures,
so they can implement new strategies around sustainable farming practices and future proof their business.

“We’re focused on assisting existing viable producers, and pasture based and feedlot operations for
sheep and cattle to either maximise capacity utilisation of existing agricultural assets, or to take
advantage of growth opportunities,” said Snell.

StockCo Australia was acquired by Heartland Group Holdings Limited (Heartland Group) in May 2022 and
is well capitalised to provide funding. As the leading specialist provider of livestock finance for cattle and
sheep producers in Australia, StockCo offers finance to cover up to 100% of the livestock purchase, with
no repayments required until the livestock is sold.

About StockCo
StockCo was the first company to provide innovative 100% livestock financing solutions, and has been
doing so since 1995. StockCo is the leading specialist provider of livestock finance for cattle and sheep
producers in all of the major pastoral regions of Australia. Its finance options include Trading Finance,
Breeder Finance and Stock Advance so producers can expand their operations and maximise their profits.

StockCo has been part of Heartland Group since June 2022, building on its position as a market-leading
provider of specialist livestock finance for cattle and sheep farmers across Australia. Heartland Group is
focused on delivering capital for growth, digital enhancements to the existing product offering, and
expansion into new market segments.

Heartland Group is a financial services group with operations in Australia and New Zealand. It has a long
history with roots stretching back to 1875 in New Zealand, and is listed on the New Zealand and
Australian stock exchanges (NZX/ASX:HGH).