Written by Bren O'Brien
Thoroughbred breeders will be eligible to access concessional loans from the Regional Investment Corporation (RIC) from July 1, after the RIC expanded its list of industries able to access the scheme.
The RIC was set-up in 2018 to provide Australian Government-backed finance and loan options for farmers and farm-related businesses, but the initial list of industries did not include thoroughbred breeding,
However after public consultation, and lobbying from those within the thoroughbred industry, the RIC has expanded its eligibility from July 1 this year with thoroughbred breeders able to access the scheme, alongside of turf farmers, tea tree and lavender growers.
RIC Acting Chief Executive Officer Paul Dowler said the agricultural industry’s success is supported by a diverse range of farm businesses and the RIC was delighted to provide greater opportunities for investment across a broader range of industries.
Paul Dowler | Image courtesy of the RIC
“Australian agriculture is diverse and always evolving to meet new and emerging markets so it was an important time for the RIC several years into our operations to ask industry and the public if our loan eligibility should be expanded,” Dowler said.
“Most of the 85 responses we received to the industry and public consultation agreed more farm businesses should be eligible, so we have listened to that feedback and pleased to make the changes from July 1, 2022.
“The RIC will have $266 million available next financial year for concessional loans to farm businesses, farm related small businesses and plantation growers to support regional Australia and the agriculture sector’s target to become a $100 billion industry by 2030.”
The decision has been viewed as a major victory by those within the thoroughbred industry, with lobbying, led by Thoroughbred Breeders Australia (TBA), successfully enabling increased financial options, which should help further power the robust Australian industry.
“It’s a really important decision that we have got. For people who want to invest in their farm and drive their business forward, to be able to borrow up to $2 million is significant,” TBA chief executive Tom Reilly said.
“It’s a really important decision that we have got. For people who want to invest in their farm and drive their business forward, to be able to borrow up to $2 million is significant.” - Tom Reilly
“Almost all of the loans are interest only for five years, and at a concessional, variable marginal rate of 2.39 per cent as it stands at the moment.
“If you wanted to go and buy breeding stock or farm machinery, you will be paying considerably more than that through a commercial loan and so to have this opportunity is going to be really important for a lot of breeders out there.”
Reilly said the RIC would be particularly valuable for small-to-medium-sized businesses, which are looking to scale upwards.
Tom Reilly | Image courtesy of Bronwen Healy
“It especially helps people that might be starting out. It can be used to buy your first farm and for young businesses, or people who want to invest back into their business, it’s a really a major leg up,” he said.
Finance freedom opens options
Significantly, the expanded farm business eligibility also follows the recent AgriStarter Loan eligibility change to include existing share farmers and farm leasing business owners to use the loan to purchase a farm business, develop an existing farm business or purchase farmland.
Reilly said there were a couple of clear examples where the access to greater financial means could prove a game-changer for those in the industry.
“There is a specific loan for either buying for your first business, or where we might have a family business, as we have lots of in this industry, you might have one sibling that wants to buy the other businesses out and run the farm themselves,” he said.
“It’s challenging at times to get finance for that. We have definitely had breeders who said to us we want it for that reason and it’s important for us.
“Likewise, I've also had breeders who have been in the game a few years say we need to have better broodmares to take it to the next level.”
“I've also had breeders who have been in the game a few years say we need to have better broodmares to take it to the next level.” - Tom Reilly
The loans need to be matched by a commercial lender, however, in the case of financing bloodstock purchases, both Australian sales companies, Inglis and Magic Millions, would qualify as appropriate lenders.
That could mean greater participation in the broodmare market, helping further grow that aspect of the bloodstock industry.
“For those people who really want to have a crack and keep driving the industry forward, this gives them that extra bit of assistance,” Reilly said.
“For those people who really want to have a crack and keep driving the industry forward, this gives them that extra bit of assistance.” - Tom Reilly
“It’s $2 million per loan, but you can apply for more than one loan through RIC as well.”
TBA has led the consultation with government, specifically agriculture minister David Littleproud and finance minister Simon Birmingham, to ensure that thoroughbred breeding was included in the expanded list of businesses.
“Once the review was called, we put together a fairly substantial proposal to them to tell them why it was important our industry has this. It will really help the thoroughbred industry grow and help people across regional Australia grow their businesses,” Reilly said.
