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National Australia Bank has responded to market demand for more flexible harvest finance options with the release of a non-underwritten version of its popular National Wheat Advance product.
The National’s General Manager Agribusiness Mike Carroll said the move will be welcomed by customers who want the option to manage price risk themselves, or prefer to use alternative strategies with their Risk Management Specialist.
"Our close customer relationships give us a keen understanding of what growers want. Once again, we are improving our product, providing greater choice and driving competition in the market," Mr Carroll said.
"If a grower wants easy access to the value of their wheat pool contracts, but wants to manage the risk themselves of a fall in wheat prices, the Full Recourse option provides access to 80% of the estimated pool return, GST inclusive and will save growers the underwriting fee."
The National Wheat Advance is a loan against a wheat grower’s expected AWB pool distribution. In the past, the loan was only provided with underwriting to protect the customer against the risk of a fall in the wheat price against which the wheat advance limit had been calculated.
"As always, the National’s product is competitively priced and this development will help us consolidate our strong position in this market," Mr Carroll said.
The Full Recourse product incurs an activation fee of 20 cents per tonne, has no underwriting fee and, like the fully underwritten version, has no application fee or line service fee.
The Underwritten National Wheat Advance lets growers borrow against their choice of 80%, 70%, 60% or 50% of the estimated pool return.
"Another point of differentiation is that the National’s harvest finance product links the underwriting fees to the customer’s selected borrowing limit," Mr Carroll said. "There is also the added flexibility of being able to protect the value of AWB Nominated Estimated Pool Return without the need to draw upon the facility to benefit from underwriting."
Benefits of the National Wheat Advance include:
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interest is only paid on the amount drawndown;
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underwriting fees are lower if you choose a lower percentage of your credit limit;
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24 hour, 7 day a week access to funds available via National’s internet and telephone banking;
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you don’t need to be an existing National customer to apply.
National Wheat Advance Interest Rate*
| Total Amount Drawndown |
Interest Rate |
| $1 < $100,000 |
7.70% pa |
| $100,000 < $200,000 |
7.40% pa |
| $200,000 < $400,000 |
7.10% pa |
| $400,000 plus |
6.85% pa |
Underwriting Fees*
| Customer's Nominated % Credit Limit |
Underwriting Fee per Tonne |
| 80% |
$1.60 |
| 70% |
$1.35 |
| 60% |
$0.95 |
| 50% |
$0.65 |
* Underwriting Fees and interest rates are current at 12 October 2004 and are subject to change.
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