Farmer trades livestock without putting down a dollar

Ray McNamara turns a handy profit trading livestock without being at the market or putting a dollar down.

The Elders Camperdown client and wife Cathie have assembled a team around them to spot the right pens, buy them and arrange the finance while the McNamaras focus on their day-to-day work. The McNamaras run the home farm at Colac in Victoria’s Western District, and Mr McNamara also manages properties for a client.

“It’s pretty simple for us,” Mr McNamara said.

“Our agent, Corey Baulch, is at the market once or twice a week and, if he sees something under the odds because it’s too hot or there weren’t enough people there on the day, he picks it up for us.

“I’ll get a phone call and the truck will roll in and we’ve got cattle.”

Mr McNamara uses a StockCo facility through Elders to seize those opportunities. The facility, Mr McNamara said, was convenient and preserved the family’s cashflow because funding costs were only deducted from sale proceeds once the livestock were sold.

“We like having everything under one roof to keep it simple,” he said. In just eight months, Mr McNamara made a return of more than $30,000 on the purchase of 30 head of cattle.

“Our motto is ‘buy cheap, sell dear’,” Mr McNamara said.

“If you’re going to trade, you need to work closely with a good agent you can trust and Corey is the backbone of what we do with our cattle.

“The association we have with Elders and StockCo is gold. That’s what I tell people, don’t do anything else, just deal with those two.”

HOW STOCKCO WORKS

StockCo is a specialised livestock funder, which offers 100 per cent invoice funding and cash advances against commercial sheep and cattle for trades, backgrounding and feedlotting.

Agri-finance manager James Bik said traditional financiers could be reluctant to lend for working capital purposes, unless security could be taken over farmland. In contrast, StockCo would fund 100 per cent of the value of the livestock and GST.

“There are no establishment charges or other fees. The facility holder doesn’t pay anything upfront,” he said.

No repayments are required, as charges are deducted from sales proceeds when the stock are sold and Mr Bik said the StockCo facility was designed to be nimble.

“Elders understands how rapidly the livestock market can move and quick facility establishment is one of the key features of StockCo,” he said.

“It typically takes around a week to convert an enquiry into a facility ready to trade, and often happens even faster.”

Interest charges vary and are subject to assessment, but Mr Bik said pricing was typically at 1 per cent per month on the drawn balance.

“The biggest benefit is that you don’t outlay any funds - you pay it back when you sell.”

FLEXIBLE FINANCE FOR PROFITABLE FARM DECISIONS

Farmers can use StockCo livestock financing to cover 100 per cent of the purchase cost of new stock and even unlock the equity in existing stock with a cash advance to top-up cashflow.

Elders agri-finance manager James Bik said StockCo facilities were mostly used by farmers to fund livestock trades.

“We provide the finance that covers the whole cost of the livestock purchase, including GST, and take security over the stock,” he said.

“StockCo owns the livestock, so other financiers’ security is unaffected.

“No repayments are required. The interest charges are deducted from sales proceeds on behalf of the farmer when stock is sold.”

StockCo also has options for funding for the purchase of commercial breeding stock, with three to four-year terms and annual repayments available.

Then, producers could arrange a cash advance against the progeny or to sell progeny to offset the original borrowing.

“Farming is all about getting the timing right,” Mr Bik said. “If unlocking the equity in your stock provides the cashflow to get that seed in the ground at the ideal time, that might just set you up for a successful year.