Crop funding trend: Growers tapping into the value of their crop to cover production expenses

Grain growers are increasingly funding their production costs by tapping into the value of their crop. Grower take-up of Production Advance has increased since AWB started offering the program four years ago. But this year, we’re beginning to see a new trend emerge. Growers are tapping into Production Advance not just once, but multiple times, and in some cases, many times.

It is increasingly common this time of year when variable expenses such as fertiliser or herbicide costs fall due, or during harvest. It’s through tools like Production Advance that have helped reduce business stress for growers by allowing access to their future crop cashflow for today. 

Up to $100 per tonne of contracted wheat or barley can be pre-paid to growers through Production Advance and up to $200 per tonne for canola.

 

What is the reason for the growing popularity and increase in the frequency of usage of this product? Grower feedback would suggest the following:

• It is extremely simple and quick to access funding. Once a grower is pre-approved, it’s an even simpler process, they can access funds within day and it really helps customers plan ahead with their farm businesses. 
• It is an alternative to bank debt. Many growers have an overdraft account, but they are increasingly using this for other expenses, while using a prepayment from wheat or canola contracts to pay for production costs. 
• Production Advance can now be accessed through a greater range of contracts, from forward contracts, pool products such as Season Starter and Harvest Pool, Price Risk management products like Basis Plus, or through being an AWB Victory Canola grower. 
• Once you’re pre-approved, it’s simple to access multiple draw downs.

 

We are able to make this process very quick and simple due to the relationship we have with our grower customers. We understand their business and this helps us provide timely approvals for cashflow.

Growers who would like to seek pre-approval for Production Advance should contact their local AWB Territory Manager. You can find your local Territory Managers contact details on our regional contacts page.

 

Originally published 26 September, 2018