FOR the first time Glencore Grain will offer Australian growers a cash advance for their grain commitments this season.
The company's WA manager Rob Haddrill told Farm Weekly it was the first development of its kind in Australia, which stemmed from the reality a proportion of Wheatbelt farms would not produce any grain in the 2013/14 season due to rising debt levels and a lack of grower confidence in their future.
Glencore's pre-harvest payment solution, the Seeding Payment Contract, joined CBH's Pre-Pay Advantage product as one of the very few available financial resources for growers to access without having to visit a bank.
But unlike Pre-Pay Advantage's July 1 fund distribution to successful applicants, Glencore's cash advance would become the only product available as early as next month.
Mr Haddrill said Glencore's seeding payment contract would offer seeding payments of up to $110 a tonne for wheat and barley and up to $200/t for canola.
"Glencore Grain's Seeding Payment Contract is a specialty grain marketing product that will provide growers with access to funds before sowing," he said.
"To assist growers with the sowing of crops the unsecured seeding payment will available from as early as April, once application and approval processes are complete."
Mr Haddrill said it was a specialty product because no similar products in the market offered such an early payment.
"On contracting Glencore Grain will use its world class trading expertise and knowledge to professionally manage and market growers' grain," he said.
"This includes managing a combination of physical cash sales and commodity and foreign exchange hedging which enables growers to participate in pricing opportunities during the growing season and post-harvest.
"We are really pleased to be able to offer this product to WA growers."
An estimated return was also set to be published for each grade on a port-by-port basis on Glencore Grain's website.
But Mr Haddrill reminded growers the figures would undoubtedly change during company's fortnightly update throughout the life of the contract.
The company's Seeding Payment Contract is a pool product and the finance cost will be calculated based on a variable interest rate of 8.95 per cent per annum.
The rate is also applied to all funds paid out to growers before receiving payments for grain sales.
But what about un-fulfilled contracts?
Grain that fails to be delivered will need to be replaced so remaining participants in the pool are not adversely affected by the non-delivery of grain against a contract.
Additionally, the re-payment of the seeding payment would be required immediately.
General manager of CBH Grain's marketing and trading arm Jason Craig wouldn't tell Farm Weekly why CBH couldn't offer its Pre-Pay Advantage payments as early as Glencore Grain.
But he did say the payments could be accessed from July 1 after actual plantings had occurred to ensure Pre-Pay Advantage was a flexible product to a range of growers.
"An interest rate of 7.25 per cent makes it attractive for purposes of either accessing funds at competitive rates or assisting through peak debt periods from July to October," Mr Craig said.
"We encourage growers to read the terms and conditions of any product carefully prior to entering into an agreement."
Up to $85 million could be spent on harvest pre-payments to WA growers this year.
More information: www.glencoregrain.com.au/fact-sheets