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Finding it difficult to raise capital due to liquidity barriers within the broader dairy sector?


Property Brokers 11 Jul 2020

Blog image - NZ PastoralConfidence in our NZ dairy sector has had more than its fair share of headwinds, which, given its massive $19.2 billion forecast contribution to NZ exports this season, is very hard to fathom. Even more so, given the recent rebound in dairy GDT and forward global demand.

Sometimes it takes an outside view to see the value in our NZ dairy sector, and the recent announcements from StockCo Capital and their $1 billion fund, is a good case in point. StockCo, a New Zealand domiciled finance company based in Hawkes Bay, has sought and secured the support of UK based Greensill Bank, an international market-leading provider of working capital finance.

The upshot is StockCo Capital now offers the opportunity to buy your dairy herd at the market rate. Releasing all the capital for you to apply to your business as you see fit, be it for; debt reduction, on-farm development or even more support land. The lease is financed on competitive terms, and importantly, lease payments can be tailored when the majority of the milk cheque is received.

Not that I’d be offering any tax advice, but StockCo does refer to its binding ruling from the IRD that all lease payments are 100% tax-deductible too. The dairy farmer keeps all progeny, so at the end of the four-year lease, the herd is effectively replaced and owned by the farmer again, and the cull forms part of the final lease payment.

So, with a $63 billion debt constrained farming outlook, the opportunity to look at alternative financial instruments is definitely an option worth getting advice on. This dairy offering in our view should help drive some very timely liquidity into the market, and indications are that it should carry the support of the majority of the leading banks. However, this will always be on a case by case basis.

It may also assist in limiting the level of bank exposure in support with new farm deals in the spring while still operating within approved bank guidelines. So, check out https://stockcocapital.com/ and see if this option works for your dairy business. Please note that this offering is currently only available to Fonterra suppliers under the terms of StockCo’s funding support.

It’s been a while since our dairy sector has had offers of $1 billion in funding support!

Last week, StockCo Capital General Manager, Will Purvis joined Property Brokers Rural General Manager, Conrad Wilkshire to discuss how farmers can tap into a $1 billion fund that has been raised to support the Dairy sector. Watch the full interview below.