National takes the lead in financing wheat industry - 28 November, 2000

National Australia Bank has announced a further round of cuts in interest rates and a new, low underwriting rate of $1.45 per tonne for its new product, Wheat Advance.

This month Wheat Advance is being progressively launched by the National throughout Australia as an alternative to the AWB's Harvest Payment.

Upon its launch, the National's Wheat Advance delivered Australian wheat growers approximately A$13 million in savings via an interest rate saving of between 0.25% and 0.30% per annum and an underwriting fee of A$1.60 per metric tonne versus the AWB's underwriting fee of $1.95 per tonne.

Now, following strong interest in Wheat Advance, the National has announced a new tiered interest rate structure which will deliver even further interest rate reductions to growers, lowering interest rates by up to 40 basis points. Since the launch of Wheat Advance, some growers will have seen an interest rate fall of 0.65%.

Interest rates applying from 27 November 2000 are:

The revised tiers mean growers who were just short of the lower rates available at the next tier will significantly save on finance costs.

Commenting on the price moves, Mr Mike Carroll, the National's General Manager, Agribusiness, said: "We have made a considerable investment to develop Wheat Advance and we are determined to build our market share.

"The wheat industry is now seeing savings of up to $20 million, as a result of the National competing with the AWB.

"With harvest advances and underwriting of guaranteed payments now open to competition, the pressure is now on for the National and the AWB to improve the efficiency with which we provide this service to wheat growers," Mr Caroll added.

The National's Wheat Advance is now available to growers delivering to the primary bulk handler in all States except for South Australia, however, it is anticipated that South Australian growers will also have access shortly.

To receive these savings, wheat growers simply need to complete a National Wheat Advance application and, when they deliver their wheat to the silo, nominate the AWB A$ quarterly pool payment option. Growers who have warehoused their wheat with a bulk handling company can also apply for the Wheat Advance. Application forms are available from any National Agribusiness Manager or by telephoning 13 10 12.

The National will also underwrite the guaranteed pool price at 80% of the AWB Estimated Pool Return.

Included in the Wheat Advance application is a consent from the grower authorising their weigh bridge ticket information to be electronically copied to National Australia Bank. Using this information, the National calculates the guaranteed pool return applicable to the weight and grade of wheat delivered, then deducts the grower's estimated costs and transfers the funds to the grower's nominated account.

The grower's Wheat Advance is paid out by the quarterly payments from AWBI. Once the Wheat Advance is paid out, any surplus funds are transferred to an account nominated by the grower.