Commonwealth Bank details new financial facility for dairy farmers as 17 August deadline approaches
15 August 2000
As this Thursday's deadline looms for applications for entitlements under the national Dairy Structural Adjustment Program (DSAP), the Commonwealth Bank in association with the Australian Dairy Industry Council (ADIC) have confirmed details of how DairyAdvance - the Bank's financial facility - will enable dairy farmers to access their entitlements as a lump sum.
Through DairyAdvance, the Commonwealth Bank will advance dairy farmers their DSAP entitlements in one upfront payment. The Bank was appointed by the ADIC in May as official provider to the dairy industry.
Dairy farmers must lodge their applications with the Dairy Adjustment Authority (DAA) by this Thursday, 17 August to be eligible for a share of the Federal Government's $1.7 billion assistance package. It is estimated that Western Australian dairy farmers will receive $108 million of the total package (Australian Dairy Corporation, ABARE).
Commonwealth Bank Chief Manager, Agribusiness, Mr Steve Morgan said: "DairyAdvance is a stand-alone facility available to all dairy farmers entitled to a DSAP payout. DairyAdvance remains completely separate from a dairy farmer's other banking arrangements, as farmers do not have to be existing Commonwealth Bank customers to take up the facility.
"The greatest advantage of DairyAdvance is that it provides dairy farmers with maximum flexibility and control to manage the impact of deregulation on their businesses," Mr Morgan said.
Danny Harris, President of the West Australian Farmers' Federation (WAFF) Dairy Council and an Executive Member of the ADIC, which endorses and recommends DairyAdvance, said: "By accessing their payments up front in a lump sum instead of having them spread out over eight years, dairy farmers will have a real opportunity to manage the changing environment, whether it's through purchasing new farm equipment, upgrading facilities, reducing debt or even investing off-farm.
"The exhaustive tender process was open to our largest financial institutions. The Commonwealth Bank was chosen because it offered the most flexible financial solution for all Australian dairy farmers and demonstrated a strong commitment to the Australian dairy industry," Mr Harris said.
The dairy industry restructure is the largest in Australia's history with the Commonwealth Government legislation providing for the collection of a levy on milk at the retail level to fund the $1.7 billion restructure package over eight years.
The gross value of dairy production at the farmgate in Australia is currently $3 billion per annum, $7 billion at factory level and generates over $2 billon in export earnings. In 1998/99 the 13,000 dairy farms in Australia produced 10,178 million litres of milk - an increase of 7.8% on the previous year. The industry is also currently the third largest exporter of dairy products in the world.
Mr Morgan said: "The Commonwealth Bank aims to provide support for dairy farmers through DairyAdvance during the challenging period of deregulation given the industry's expectation that 80% of farmers will want their entitlements up front.
"DairyAdvance is in line with the Bank's plan to provide a series of financial solutions that meet the needs of specialist agricultural industries.
"Farmers have until 17 August 2000 to submit their application to the Dairy Adjustment Authority (DAA) for their entitlements under the Commonwealth Government's DSAP. Based on the DAA's assessment of milk produced in 1998/99, the average West Australian farm payout will be around $237,000 over eight (8) years compared to the average Australian farm payout which will be around $125,000 for the same period."
Dairy Farmers across the nation received their official DairyAdvance packs in the mail last month.
The Commonwealth Bank is the current Personal Investor Magazine Agribusiness Bank of the Year.
Western Australian Dairy Industry Fact Sheet
Of the $1.7 billion federal assistance package, Western Australian dairy farmers can expect to receive a total of $108 million.
It is expected that each Western Australian dairy farm will each receive on average $237,254 under the Dairy Industry Adjustment Program.
Western Australian dairy farms produced 403 million litres of milk in 1998/99 accounting for 4 per cent of Australia's total milk production. In 1999, Western Australia had 423 registered dairy farms.
In 1999 in Western Australia the average annual milk production per cow was 5,478 litres - the second highest amount of all Australian states.
The dairy industry can be divided into two sectors - the drinking milk sector, which accounts for 19 per cent of milk production, and the manufacturing milk sector. Western Australia produced 211 million litres of manufactured milk and 192 million litres of market milk in 1998-99.
The average Western Australian factory milk intake for dairy manufacturers has increased from approximately 30 million litres in 1979/80 to 40 million litres in 1998/99.