A large number of feedlot operations looking to purchase store cattle and lambs have taken up a new interest free livestock finance package aimed at assisting producers to rebuild and grow their businesses when the season finally turns.
Newly-established McCulloch Agencies, backed by a specialist livestock funder, will provide clients with 100 per cent of the capital required for livestock purchases with no interest or finance charges as part of their new proactive approach.
Beneficial for short term trading operations, funding is offered for a maximum 210 day product.
After the first 120 days a marketing fee of five per cent +GST applies with that rate increasing by 0.5pc every 30 days thereafter to a maximum of 6.5pc.
Since announcing the funding package late last year, McCulloch Agencies general manager Daniel McCulloch said they had seen strong inquiry from producers.
Money would be the biggest limitation to producers when rain arrived and the package allowed producers to modernise and intensify their infrastructure while still securing livestock, Mr McCulloch said.
"The speed of money (is a big thing) in the livestock game because if you have to wait six weeks not only are you losing weight gain on those stock, but the market is going up as well and you need to buy the stock when you have got the feed," he said.
"We have had a large take up already mainly for feedlotting operations because there's a lot of opportunity around to feedlot store lambs and store cattle and people can utilise them; all they have got to do is buy the feed and we buy the livestock. Instead of the producer buying the feed and the livestock, where he can only do so many, now if he uses his money to buy only the feed and we buy all the livestock, he will actually make three times as much money."
Among the producers to take advantage of the funding is Attunga's Gerard and Lucy Gallagher who operate the sheep and cattle property, Tarrabah.
Running a lamb feedlot for the last few years, the couple have increased their cattle feeding numbers as a result of the dry conditions.
Last year they early weaned their own calves and supplemented them with great success and opted to do the same this year including introducing new stock.
With the support of the McCulloch Agencies funding, they secured more than 1000 head of Angus weaners which will be inducted, yard weaned and put on a pellet hay ration on self feeders.
The couple are hoping for a change in the season during their current short term trade to allow for an offload into a much stronger market.
Mr Gallagher said it was important to drive a return on assets and to keep the business moving forward in a tough time.
"A lot of people have just used up all their working capital, they've gone back to the bank several times to keep it going," he said.
"This product gives you the flexibility of having that finance to do a short term trade.
"It just means your business isn't going to stall, it's going to keep ticking over and you have always got something to sell.
"There is generally a sweet spot after a drought, the markets are generally pretty good, and if you do have some stock about you can capitalise on that."
The decision to undertake the McCulloch Agencies funding package wasn't just about the money savings but the agent involvement throughout the entire process.
"They (the agents) are involved in sourcing this run of calves, they are involved in setting up the deal, they were involved in setting up the finance and obviously they're going to be involved with the marketing on the way through," Mr Gallagher said.
"Whereas if you borrow money from the bank, they have a vested interest in getting their money but they don't have a vested interest in the stock and they don't have the options for you.
"The agents will have their finger on the pulse, they will know what's going on and what the best options are.
"You are not doing it all yourself, you have got a big team working for you and that's what is going to make it work."
Agents have made a lot of money in the last 12 months, we want to make sure our clients are there so we are still making money with them in 20 years time.Daniel McCulloch of McCulloch Agencies
Mr McCulloch said the new funding package put them in the trenches with producers.
"If we go and buy a steer for $1000 for a client and then if the season goes bad or the market goes bad and we sell that steer for $1000, traditionally the agent would still make money and the farmer doesn't make any money," he said.
"Whereas in this situation, we don't make any money as well so that's the risk.
"We are actually in the trenches with the client and that incentivises us to buy the right sort of stock and buy the right type, quality and price."
Having established his business six months ago, the finance package was one-way Mr McCulloch believed they could help their clients remain viable into the future.
"Our clients, if we don't look after them now, they won't be here next year," he said.
"Agents have made a lot of money in the last 12 months, we want to make sure our clients are there so we are still making money with them in 20 years time.
"We have taken the approach that we need to find a way that we can add value and make them more money and we think we have developed it."