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Australian Cattle Council : Yearbook 2011
70 YEARBOOK 2011 CATTLE COUNCIL OF AUSTRALIA Khan Horne General Manager NAB Agribusiness A positive view for the future While it’s nearly impossible to plan for such disruptions to your personal and business life, a close relationship with your business partners will help you manage the risks, rebuild and take advantage of any new opportunities. As an industry, I’m pleased to say that NAB has a bullish outlook for the beef industry and our team of 620 agribusiness bankers are here to support you. A key reason for NAB’s positive view is that protein demand in the world is growing and Australia’s beef industry is well positioned to supply the recovering economies of Asia, which are mostly expected to show good growth in 2011 and 2012. Demand for red meat will eventually outstrip supply globally. In the past, growth in demand has come from the developed economies, but as the income base in developing nations grows, so does their importance as markets. In particular, Russia, South East Asia and the Middle East are emerging as key trading partners for Australia’s beef industry. Australia’s key competitors appear to be constrained in meeting new-market demand. The United States’ cattle herd is at its lowest level in more than 50 years, Argentine production has been severely disrupted and Brazilian beef no longer has the price competitiveness it once did. In contrast, Australia is set to expand its cattle herd and increase beef production this year with improving weather, water allocations and pasture conditions. Australian beef has a good reputation worldwide with producers able to supply a clean, green product cost effectively. In the wake of the floods and cyclones, many beef regions in Australia are now enjoying high cattle-yard prices and strong export demand. NAB recognises the cyclical nature of farming and our assessment of credit risk is based on a sustainable perspective of an agribusiness’s viability that looks beyond one-off, exceptional circumstances such as droughts, floods, cyclones and commodity price cycles. As the industry enters this growth phase, NAB urges all customers to continue to talk to their banker about their business challenges and opportunities. Any loan has to be sustainable even if prices drop or interest rates rise, so it’s important to take into account likely cashflow under a range of scenarios. Like many operators in Australia’s agricultural industry, beef and live cattle producers have felt the impact of recent natural disasters at home and abroad. While prices are high, being able to pay back more of a loan may provide some benefits, or there might be opportunities to use Farm Management Deposits or other off-farm investment options. Any loan or investment strategy will need to take into account all aspects from tax implications to repayment schedules. For those getting out of the industry or starting to think about retirement, succession planning can help to put the right structures in place, maximise superannuation and minimise the disruption to the operation in any hand-over. NAB Agribusiness Managers, many who come from the land and/or with an agriculture-related degree, work closely with customers and other consultants and advisers to get the best outcomes for you. I believe one of the reasons for NAB supplying more than 28 per cent of lending to the agribusiness sector because we have a team that is committed to the industry and our customers through good and tough times. The beef industry is one of our core areas and approximately one in three cattle producers bank with NAB. We hope that 2011 is a great year for the industry and we look forward to helping you capitalise on the many opportunities available. Important Note: Any advice in this editorial has been prepared without taking into account your objectives, financial situation and needs. Before acting on this advice, you should consider its appropriateness to you. ABOUT NAB AGRIBUSINESS National Australia Bank (NAB) Agribusiness employs more than 620 agribusiness banking specialists in 110 metropolitan and regional locations Australia-wide. The Agribusiness team use their local and industry knowledge to better understand the unique environmental and economic needs of farmers and businesses beyond the farm gate - whether they provide inputs into agriculture or process, distribute or market primary produce. NAB’s flexible range of agribusiness products and services is delivered by listening to and working with customers, to tailor the best packages and advice for their businesses. For further information please visit www.nab.com.au/agribusiness.