National Australia Bank agribusiness general manager Khan Horne sees the ability to borrow against non-traditional assets such as livestock and stored grain providing greater opportunities for farm sector growth.

After a stellar 2016 year, with a record winter crop and high beef prices, the outlook for production in 2017 might be somewhat mixed but export earnings from cotton, wool and sugar were all expected to increase. So, too, were prices for live cattle, dairy products and wine.

“Banks have traditionally issued long-term loans against fixed assets such as land,” Mr Horne said.

“That’s great if you’re making serious improvements or buying the farm next door, but it can tie up equity in your property if you’re using short-term loans to manage day to day cash flow.

“These days, we’re loaning against inventories and supplier invoices and it’s freed up an incredible amount of finance for our customers.”

Invoice finance is one example, letting farmers borrow against the value of outstanding product invoices.

Instead of waiting up to 90 days to receive payment, customers can access up to 85 per cent of the value of the invoice in one day.

“Similarly, grain growers can borrow against the value of their stored grain if prices at harvest are too low,” he said. “The old adage of sell 30 per cent of grain at harvest for cash flow need not apply anymore. Whether it’s borrowing against livestock in order to buy them in the first place, or some other tangible asset that we can value, our customers can now take advantage of many more opportunities to grow their businesses.”

NAB saw double-digit growth in asset and trade loans in the past year and also strong deposit growth so far in 2017 – particularly money being set aside in farm management deposits.

“We expect Australia’s FMD balance to break the previous record of $5.06 billion before June 30,” Mr Horne said. “Money going into FMDs means our customers are making a profit.”