Fonterra’s $3.2b capital return to farmers set to boost rural incomes and NZ economy
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
ASB believes it is the first loan offer in New Zealand with a low cost funding option to assist farmers “get the balance right between productivity and environmental sustainability”.
Offered for on-farm investment to upgrade environmental compliance systems, it is priced at ASB’s cost of funding with no additional customer margin applied. Loans are available to farmers for environmental compliance purposes up to $200,000 and over a maximum five-year term.
Heer told Rural News he was “not aware of any other specific offerings to funds the effort towards getting the balance right between productivity and environment and certainly at a low-cost discounted rate”.
It is at the bank’s floating bank rate, which at the time of talking to Rural News last week was 3.8%. While that changes daily it is “reasonably flat”.
“There’s obviously a lot of positive global trends which would indicate there’s a great opportunity for New Zealand to increase the volume and the value of our exports in the agricultural area,” Heer says.
“The increase in productivity potentially puts some strain on the environment and our view is there has to be a good balance between maximising productivity and balancing that against sustainability of the environment.
“This is an important issue for all New Zealand because it talks to the economic well-being of the country from an export volume and value point of view and also from the environmental point of view. All New Zealanders are stakeholders both from an economic and environmental point of view.
“That’s the challenge; in the media, among industry groups and in the industry, there is a lot of conversation at the moment about getting that balance right.
“The environmental regulatory environment is evolving, we see new requirements, different types of requirements coming in for the farming industry. It’s not just about what are the requirements of today, but what are the changing requirements going forward.
“We’ve seen DairyNZ, Fonterra, Federated Farmers, Beef + Lamb in this conversation, be it effluent for the dairy industry or fencing of waterways. We want to be part of the solution. We feel a funding package at cost – there’s no profit in it for us – is just really about pitching in and helping provide a solution so farmers can meet and adapt to the requirements for environmental sustainability while maximising productivity.”
Heer says it is an evolving space and ASB wanted to show some “corporate responsibility and get in behind it and look to provide an important part of the solution”.
“The farming community is engaged with protecting the environment and making sure they pass it on in good health; the will is there on behalf of farmers.
“A lot of these initiatives do cost money so they need to be funded by trading income or by debt. And it is evolving; meeting the requirements in 2012 may be a bit different from 2013 and there may be different requirements in 2014. It is an evolving element in running a sustainable farming business.
“All farmers I talk to are engaged in getting this right so we want to get in and help in the most appropriate way we can which is to provide some low cost funding to help them with it.”
