Views:
Ref: MG/SF/GG23082

8 December 2023

Regional Investment Corporation PO Box 653
ORANGE NSW 2800
Email: info@ric.gov.au

 
TO WHOM IT MAY CONCERN
Dear Sir/Madam

Re: Regional Investment Corporation – Product Service Review

AgForce is a peak organisation representing Queensland’s cane, cattle, grain and sheep, wool & goat producers. The cane, beef, broadacre cropping and sheep, wool & goat industries in Queensland generated around $10.4 billion in on-farm value of production in 2021-22. AgForce’s purpose is to advance sustainable agribusiness and strives to ensure the long-term growth, viability, competitiveness and profitability of these industries. Over 6,000 farmers, individuals and businesses provide support to AgForce through membership. Our members own and manage around 55 million hectares, or a third of the state’s land area. Queensland producers provide high-quality food and fibre to Australian and overseas consumers, contribute significantly to the social fabric of regional, rural and remote communities, as well as deliver stewardship of the state’s natural environment.

AgForce welcomes the opportunity to provide a submission to the Regional Investment Corporation (RIC) Review of farm business concessional loans, current sector priorities and emerging industry needs that will inform government policy.

Our member views are noted below; in addition, AgForce has contributed to the National Farmers Federation (NFF) submission and is supportive of their submission, which should be read in conjunction with ours. Where any divergence of views exists, AgForce Queensland Farmers’ stated position is to be preferred.

AgForce received membership and industry feedback regarding RIC loans, we offer this feedback in support of our position.

The Queensland Rural and Industry Development Authority’s (QRIDA) programs and services, backed by the Queensland government, has been effective in the delivery and administration of a wide range of financial assistance programs, to a diverse range of applicants, especially in the area of drought and recovery finance loans.

AgForce believes the Australian Government, though RIC, has a continued role in providing our agricultural sector with a holistic financial service lending program, tailored to assist farmers meet challenges of climate variabilities, barriers to farm investment in innovation, combat competitive farm production systems, while improving producer capacity to invest in emerging opportunities and renewable technologies.
 
We recognise in the past RIC has been seen as a bank of last resort; lengthy loan processing times (especially in drought events) created negative sentiment amongst producers, dissatisfaction in service and led to missed investment opportunities. However, we acknowledge significate improvements have occur over the years, with strongly competitive lending rates, and efficient turnaround times.

An opportunity exists for RIC to support our land managers and one of our largest revenue sectors, to respond to economic complexities of agricultural sectors and offer improved loan eligibility criteria, more flexible loans terms and conditions and less restrictive income and repayment expectations.

AgForce’s approach to producer funding, investment, innovation and the development of production systems is considered in accordance to the needs of each commodity and demographic, recognising productivity challenges of varying landscapes. RIC lending terms and conditions should allow land management practices that encourage production businesses to adapt to environmental, social and economic factors eg, allowing land to rest and rotational grazing and cropping, which provides relief from productivity pressures and stressors on the environment, that may otherwise cause greater environmental deterioration over a period.

Furthermore, AgForce seeks to promote ‘Income Contingent Loans’ (only paid back once earnings are over a certain threshold) that supports the investment and longevity of our family-owned agricultural businesses, allowing for adoption of renewable technologies that reduce emissions, improve efficiency, increase productivity and enhance agricultural sustainability; loans that support new entrants on farm or bring young family members back to the farm, with capital loans for young producers and tailored succession planning loans that assist to retain producer skill and knowledge in rural and regional communities.

Members Suggestions for Improvements to the RIC Services Offering

Proposed RIC Framework:

  • Government backed loans versus commercially backed loans, with legislation to support.
  • Changes to the RIC suite of services to consider; allowing businesses to adapt to climate variability and changes to business productivity needs.
  • Simplified loan application processes and turnaround times, that applies a principle of ‘sufficient detail’, as opposed to extensive detail.
  • Agricultural lending and programs that supports Australian producers rather than foreign owned subsidiaries.

Proposed RIC Loan Service Offering:

  • Concessional loans and ‘Income Contingent Loans’, that respect the agricultural business cycle.
  • Innovation loans for programs that assist with:
    • Investing into new technologies, and renewable energy projects
    • Lowering emissions
    • Soil testing
    • Funding for education of farmers
    • Assistance with improving agricultural practices
  • Drought preparedness, resilience and recovery loans
  • Succession planning loans, without restrictions and longer terms ie, 20 years plus loans.
  • More favourable access to capital lending for new entrants to farming ie, removal of current access to capital restrictions eg, removal of 50% total debt with commercial lender, or the 50% ratios of labour and income restrictions.
  • Better promotion of ‘how to access’ RIC services.
  • Expand access to lending service to Financial Service Providers and Broker network.

Proposed RIC Loan Terms and Conditions:

  • Increase maximum loan amounts, as currently funding offered is insufficient to meet scale of some farms’ businesses.
  • Longer loan terms to ease productivity pressures on business, (account for 20-year business plans).
  • Variable rate conditions to loan terms, that factor impact of climate variability over the short term or medium term eg, in addition to interest only periods.
  • Variable and fixed rate term loans, reducing balances, less restrictive income and repayment schedules.
  • Unsecured short-term loan facilities.
AgForce thanks RIC for the opportunity to provide input to the review and we look forward to contributing further to the upcoming statutory review.

If you have any questions or require further information regarding this matter, please contact Sam Forzisi, AgForce Policy Director, by email: forzisi@agforceqld.org.au or mobile: 0499 960 006.

Yours faithfully

Michael Guerin
Chief Executive Officer




 
Keywords: Submission, Regional, Investment, Product, service, Review