New options for farmers to borrow against shares - 23 June 2005

Thursday, 23 June 2005

The privatisation and public listing of several major agricultural companies in recent years has left many farmers sitting on valuable shares, which the National Australia Bank (NAB) says can be used to provide further investment opportunities.

Head of NAB’s new Agribusiness Wealth Planning team, Chris Fry, says farmers should consider whether they can use their equity to create wealth off farm, or to meet working capital requirements on farm.

“$2.8 billion of equity has been released back to the agribusiness sector just by the public listing of AWB Ltd, Graincorp and ABB Ltd alone.

“Most of these shares are still farmer owned and for the majority continue to sit on the farm balance sheet.

“However, another option to consider is using facilities such as margin lending to leverage the value of the shares by borrowing against them,” Mr Fry said.

NAB has just added Graincorp, ABB Ltd and Queensland Cotton Holdings to its Margin Lending Approved Investment List, which also includes AWB, Wesfarmers, Futuris & Nufarm.

Farmers can borrow against the value of their shares with the maximum amount for each share as follows:

“The ability to borrow against these shares increases the options farmers have to develop strategies that diversify their wealth beyond the farm gate and improve their potential to expand on farm operations,” Mr Fry said.

“While bigger isn’t always better, the strongest farms are on average larger and are making good use of economies of scale to spread their fixed costs over a greater revenue base.

“They are also looking to the future, and investing for retirement through superannuation schemes or other methods.
 
“All farmers should be talking regularly to their financial advisers about the full range of options available to them.”

For further information or to apply for a National Margin Lending Facility, call a Client Service Representative on 1300 135 145 or contact your Local Agribusiness Manager.

About NAB Agribusiness
The National Australia Bank (NAB) employs more than 550 agribusiness banking specialists at over 110 regional locations Australia wide.  The Agribusiness team at the NAB is a leader in providing agribusiness banking services to Australian rural businesses, agriculture, forestry and fishing industries. It serves customers across Australia ranging from small family farming enterprises to large multinational operations.

For further media information, please contact:
Guy McKanna
NAB Australia Corporate Affairs
Tel:  (02) 9966 3532
Mob: 0402 893 843

* The information contained in this media release is for media advice purposes only. The contents are true and correct at time of publishing/issuing, however may change over time. For further information about NAB products or rates, please go to Interest Rates, Fees & Charges