IN THIS REPORT: AN IMPORTANT PART OF OUR HERITAGE

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1 Report No. 5 July 2013 IN THIS REPORT: The very specialized and sometimes volatile nature of agribusiness operations demands a different kind of banking response. How are our agri-banks cutting it in their role as key supporters of farming enterprises? AN IMPORTANT PART OF OUR HERITAGE Since white settlement in Australia, farming has been a significant contributor to economic output. From small-lot farming after settlement to riding the sheep s back throughout the 1800 s and diversification into cattle, fruit and vegetable crops later on, agricultural production has always played a significant part in Australia s economic and cultural heritage. In terms of employment that significance has waned over the past one hundred years. The 1901 Population Census recorded 14% of Australia s working population as being involved in the agricultural and pastoral industries; that figure today is closer to 3%. Despite the lower employment figures the economic importance of agricultural production is still significant, contributing approximately $34.4 billion to Australia s GDP in 2011/12. It is interesting to look at the gross value of Australian farm production across different sectors of the industry (below), as well as the volatile year-by-year production volumes that are contributed to by climate, currency and commodity price fluctuations. This often unpredictable volatility is one of the reasons why a co-operative and productive relationship between producer and financial institution can be crucial for ongoing success. Source: daff.gov.au YOUR GUIDE TO PRODUCT EXCELLENCE

2 WHAT DOES AGRIBUSINESS NEED FROM A FINANCIAL INSTITUTION? So what do farmers require from a business banking relationship? It goes without saying that standard business finance and deposit products are essential. Beyond the standard practice though, CANSTAR consider the following institutional factors to be an important part of a successful agribanking approach. Availability of Relationship Managers Despite the increasing prevalence of online transacting and banking self-service, the specialised nature of agribusiness means that the human factor is still an important feature in a good agribusiness relationship. Whether face-to-face or on the telephone, an availability of well-trained, knowledgeable and productive relationship managers is paramount to the ongoing success of an agribusiness division within a financial institution. Range of Additional Products and Services Beyond standard loan and deposit products, agribusinesses can require access to other more specialised products, including: Risk management products. As an export industry that is subject to both currency fluctuations and commodity price fluctuations, agribusinesses can require access to risk management products that help to smooth cashflow. Seasonal finance. Aside from the risk of drought or flood, many agribusinesses are exposed to seasonal fluctuations in cashflow, with expenses often being incurred long before income is realised. Access to seasonal finance products can be essential to keep the business running throughout the year. Equipment finance. The equipment required to keep an agribusiness operational can range well into six figures per item. Specialised finance is a must! International services. Dealing with foreign countries provides its own set of issues, one in particular being currency fluctuations. Options to mitigate this risk are necessary especially with the large impacts changes in currency value can have on the bottom line. Additional products. There are a myriad of additional products livestock easing arrangements or farm insurance, for example - that might be required to ensure the smooth operation of an agribusiness. Other specialist services In addition to products, agribusiness can benefit from access to other specialist financial services, including legal and tax advice, as well as estate planning and financial planning advice and may wish to obtain these other specialised services under the one roof. Financial institutions can also play a key business coaching role; providing support, knowledge and guidance on all agribusiness financial needs. Online Banking Functionality Personalised service is crucial but agribusiness also require excellent online banking functionality. That includes general mobile banking, internet banking (the secure login) and website (the public, unsecure side of the website) functionality, as well as easily accessible agri-specific tools and information. Information and Education Services Farming is an intensive business with little time for research. Financial institutions can add a great deal of value to their agribusiness clients by the provision of online economic and industry insights, analysis and education tools. It is in the interests of financial institutions for their customers to succeed financially and they can potentially play an important mentorship role, providing property owners with access to market knowledge and insights to help identify business growth opportunities. YOUR GUIDE TO PRODUCT EXCELLENCE 2

3 WHO OFFERS OUTSTANDING VALUE? This year we congratulate ANZ on being named by CANSTAR as the Best Value Australia Agribusiness institution. ANZ s success is a result of the consistently strong value it offers across all three segments we compare for the agribusiness award business deposits, business finance and institutional factors. It is their consistent performance across all the different product sectors coupled with their serviceability and the benefits they offer to their agribusiness customers that mark them as best in the industry for ANZ has 790 bank branches, 116 business centres and 199 dedicated Agribusiness Relationship Managers across Australia who are available to their customers on both mobile and . The bank provides specialist insurance products, including equipment and farm buildings insurance, and have specialist agribusiness insurance representatives available. ANZ also include industry and economic reports as part of their banking package, with no minimum borrowing or deposit amounts required in order to qualify for the package. $1.7 TRILLION IN EXPORTS BY 2050 Tania Motton, ANZ General Manager Regional Business Banking, shared her views on some of the main challenges, opportunities and requirements faced by Australian Agribusiness customers today. The full article can be viewed on CANSTAR s website, with an edited version is included here. The challenges The nature of farm performance is that it is variable and the agriculture industry can be challenging, with farm businesses facing constraints around issues such as succession planning, farm turnover, and access to capital. But while short term conditions can be tough, Australian agribusinesses are well placed to take advantage of opportunities in the longer term. The Asian Century is a rare chance for Australia to reinvigorate its agriculture sector, and we want to work together with industry to overcome some of the hurdles that currently exist, so Australian agribusinesses can make the most of the food boom. The opportunities As outlined in the recent ANZ insight report, Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand, we have the land, the water, the skills and the geographic proximity to benefit from huge middle class populations emerging in Asia with sophisticated tastes and rising incomes. With targeted actions, Australia stands to capture up to $1.7 trillion in agricultural exports by One of the key issues discussed in the report is attracting skilled labour to agriculture. Today s leading farmers are high-tech and innovative - farm machinery relies on GPS and they use sophisticated financial, marketing and risk management tools. But too often, farming is not perceived in this way. This needs to change if we are to attract smart, business-minded people back into agriculture, particularly among the younger generation. YOUR GUIDE TO PRODUCT EXCELLENCE 3

4 The requirements ANZ offers an extensive range of financial products to Agribusiness customers. Most importantly though, is the deep understanding and knowledge of our clients, industries and businesses which allows us to tailor financial solutions to their specific needs. For example, given the variable nature of farm performance, revolving agri lines of credit enable farmers to structure their borrowing in line with seasonal cash flow. We understand that averages don t always occur in a given year and having structures in place to help our customers deal with volatility in commodity prices and seasonal variations is vital. Having the right business equipment, vehicles and plant machinery is also crucial for the growth of a farm business. Financing these assets presents an opportunity for a banking solution that is customised to suit a customer s individual business needs. Additionally, ANZ s super regional strategy puts us in a unique position to help foster opportunities for our Agribusiness customers as they seek to play a prominent role in satisfying growing food demand, particularly from the Asia region. Relationships are an important part of identifying the right channels in Asia and our customers can benefit from our extensive network across Australia, New Zealand and the Asia Pacific region. For example, a business relationship in China requires strong partnerships, as well as an understanding of the culture, including the need for permits and approvals. Having people around you who have a solid understanding of what is required will help Australian agribusinesses avoid stumbling points and get the business operating sooner. The CANSTAR best value Australia agribusiness award acknowledges not only ANZ s strong product suite but the valuable contribution we make to the agribusiness industry through our expertise and market insights. HOW WE UNDERTOOK THIS COMPARISON If you would like to understand how we compared agribusiness banks to arrive at the one offering the Best Value across the country, please read our Methodology document which appears after the results. The Australian agriculture sector is a world leader in providing high quality food and fibre for a global population using innovative technologies and sustainable natural resource management. It is productive, profitable, innovative and valued for its environmental, economic and social contribution to Australian life. The Blueprint for Australian Agriculture, COPYRIGHT CANSTAR Pty Ltd ABN , The recipient must not reproduce or transmit to third parties the whole or any part of this work, whether attributed to CANSTAR or not, unless with prior written permission from CANSTAR, which if provided, may be provided on conditions. DISCLAIMER To the extent that any CANSTAR data, ratings or commentary constitutes general advice, this advice has been prepared by CANSTAR Pty Ltd ABN AFSL and does not take into account your individual investment objectives, financial circumstances or needs. Information provided does not constitute financial, taxation or other professional advice and should not be relied upon as such. CANSTAR recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser. A Product Disclosure Statement relating to the product should also be obtained and considered before making any decision about whether to acquire the product. CANSTAR acknowledges that past performance is not a reliable indicator of future performance. Please refer to CANSTAR s FSG for more information at YOUR GUIDE TO PRODUCT EXCELLENCE 4

5 Agribusiness Award REPORT DATE: July 2013 We endeavour to include the majority of product providers in the market and to compare the product features most relevant to consumers in our ratings. This is not always possible and it may be that not every product in the market is included in the rating nor every feature compared that is relevant to you. Company Agribusiness Packages Seasonal Finance Equipment Finance Trade Finance Facility Foreign Currency Account Cash Flow & Budgeting Tools Disaster Relief Assistance Industry Specific Reports Online access for Dual Signatory A/C Total Branches & Business Centres ANZ Banksa Commonwealth Bank Nab Rural Bank St.George Suncorp Bank Westpac your guide to product excellence Rural bank offers some of its features through channel partners (Elders & Bendigo Bank) Report Date: 31/07/2013, All information is correct as at June 1st, ONLINE BANKING AWARD page 1

6 METHODOLOGY OVERALL METHODOLOGY ASHES COMES In conjunction with the business banking star ratings, CANSTAR Best Value Australia: Agirbusiness is awarded to the institution that provides the best combination of products across the business banking star ratings profiles, as well as excelling in a range of institutional factors. The award aims to give recognition to the institution that backs up quality products with great service to agribusiness customers. Institutional factors that were considered include: Relationship Managers Range of Additional Products and Services Online Banking Functionality Other Specialist Services; and Information and Education Services The breakdown of weighting for each category is displayed in the following methodology tree. YOUR GUIDE TO PRODUCT EXCELLENCE

7 Business Finance The methodology applied for Term Loan, Overdraft and Credit Cards is that used in Australian Business Banking star ratings. Deposit Products The methodology applied for Savings Account and Transaction Account is that used in Australian Business Banking star ratings. Term deposit and FMD at call sections are predominately rate based calculations with no consideration placed on product features. Within Farm Management Term Deposits the range of offers are considered i.e. the amount of terms. YOUR GUIDE TO PRODUCT EXCELLENCE 2

8 Institutional Factors How often are Agribusiness products reviewed for award purposes? All ratings are fully recalulated every twelve months, based on the latest features offered by each institution. CANSTAR also monitors changes on an ongoing basis. The CANSTAR Best Value Agribusiness award will be decided once a year. Does CANSTAR rate other product areas? CANSTAR researches, compares and rates the suite of banking and insurance products listed below. These star ratings use similar methodologies to guarantee quality, consistency and transparency. Results are freely available to consumers who use the star ratings as a guide to product excellence. The use of similar star ratings logos also builds consumer recognition of quality products across all categories. Please access the CANSTAR website at if you would like to view the latest star ratings reports of interest. Account Based Pensions Agribusiness Business banking Business life insurance Car insurance CFD trading Credit cards Deposit accounts Direct life insurance Health insurance Home & Contents Home loans Life Insurance Managed Investments Margin lending Online Banking Online Share Trading Package banking Personal loans Reward programs Travel insurance Youth Banking & Education DISCLAIMER: To the extent that any CANSTAR data, ratings or commentary constitutes general advice, this advice has been prepared by CANSTAR Pty Ltd ABN AFSL and does not take into account your individual investment objectives, financial circumstances or needs. Information provided does not constitute financial, taxation or other professional advice and should not be relied upon as such. CANSTAR recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser. A Product Disclosure Statement relating to the product should also be obtained and considered before making any decision about whether to acquire the product. CANSTAR acknowledges that past performance is not a reliable indicator of future performance. Please refer to CANSTAR s FSG for more information at All information contained herein shall not be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use for any purpose, in whole or in part, in any form or manner or by means whatsoever, by any person without CANSTAR s prior consent. All information obtained by CANSTAR from external sources is believed to be accurate and reliable. Under no circumstances shall CANSTAR have any liability to any person or entity due to error (negligence or otherwise) or other circumstances or contingency within or outside the control of CANSTAR or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication, or delivery of any such information. Copyright 2012 CANSTAR Pty Ltd ABN YOUR GUIDE TO PRODUCT EXCELLENCE 3