NOT FOR

LOAN ANNUAL R!;PORT

CONTt;NTS

4 A message from the Chair

5 Membership of Council

6 Statutory Role

6 Young I=armer Profile

7 The Year in Review

8 Loan I=acilities

10 Testimonials

14 I=reedom of Information

14 Statement of Expenditure

,

A M~SSAG~ ~ROM T~~ C~AIR

In the Young Farmer Finance Schemes' 32nd year Rural Finance farewelled one of the founding influencers of the Scheme, Mr Bruce Dwerryhouse who retired in April 2012. Bruce's retirement gave us cause to look back in time and review the previous work of the Scheme. The following excerpts are from the YFFC Chairman's remarks of 1980.

"The Young Farmers' Finance Scheme was established to examine and advise the Government of Victoria of

suitable systems of financial and other assistance for young people endeavouring to get established in farming.

This has been a perennial problem, since many young people, who have the vigour and competence to operate most efficient agricultural enterprises, are often limited in the capital they can apply to the purchase of farming assets. In recent years, this has become even more difficult with the escalation in land values and the increasing costs of

stock and equipment".

It is astonishing that this same situation still exists more than three decades later.

"There still exists a problem in family succession where retiring parents require some cash settlement out of the property,

on passing the assets to the next generation, particularly in cases where large mortgages still exist In addition, there are

many young people who have a desire and ability to become farmers but do not have family properties or independent

wealth on which to rely".

"In the past, the Government has been able to assist new blood into agriculture by soldier and civi lian settlement schemes

through closer settlement and new land development. The capacity to do this is now severely restricted due to the limited

amount of potentially productive land available for development or subdivision. Thus, the solution to the problem of assisting new blood into farming lies in alternative avenues'.

Acutely aware of the ongoing challenges, in 2012 the Government also released the findings of the 'Inquiry into the Capacity of the Farming Sector to Attract and Retain Young Farmers and Respond to an Ageing Workforce' which

produced some 39 recommendations which can be generally categorised into the following six main themes of: the need to improve advocacy of agriculture; develop better public relations between rural and metropolitan audiences; increase

the number of opportunities available for young people seeking a career in agriculture; explore finance and alternative investment models and; enhance information sharing and collaboration methods.

Although we were fortunate enough to receive a 50 per cent boost to the scheme to $22.5M in 20 I I, all 2012 funding was fully subscribed which validates the demand of this Scheme. Since inception the Young Farmers Finance Scheme has now assisted more than 2,000 young farmers in Victoria get established.

As we embark on what will herald 33 years of the Young Farmer Finance Council, our task continues to be exactly as

articulated at the commencement of the Scheme. What are the best assistance measures to encourage industry renewal

in Victorian primary production?

I thank all council members for their ongoing contribution and look forward to working with them in the coming year, as

we aim to advance this much needed and worthwhile purpose.

R GOUDSWAARD

Chair

M [M B[ RS f-l IP O~ COU NCIL

Mr Rob W Goudswaard B. Ee, Grad Dip Corp Fin (RMIT), FAlCO, F Fin

Mr Goudswaard was appointed CEO and director of Rural Finance on 1

August 20 10. Prior to this, Mr Goudswaard had 30 years experience with

Australia and New Zealand Banking Group Limited in various roles including

Chief Risk Officer Institutional, Managing Director Regional, Rural and

Small Business Banking, General Manager of Personal Banking Asia and

Pacific and Chief Operating Officer with ANZ Small to Medium Business.

He has held leadership roles bo th in Australia and internationally.

He is a fellow of the Williamson Community Leadership Program and

an alumni of Melbourne Business School, London Bu siness School and

Wharton/RAM University of Pennsylvania. He has been a director of World

Vision Australia since 2008 and is currently Chair of the People, Culture

and Remuneration Committee. Mr Goudswaard is also Chair of the Young

Farmer's Finance Council. Mr Goudswaard is married with three children

and runs a cattle and plantation farm of 485 hectares near Alexandra.

Ms Prue Addlem Ms Addlem is a 5th generation primary producer on her family's mixed cereal

and lamb farm. Ms Addlem is a current Board member of the North Central

Catchment Management Authority and is the past immediate Chair of the

VFF Young Agribusiness Professionals retiring in June 20 11 . Ms Addlem

IS currently undertaking the Australian Rural Leadership Program Course.

Prue holds a position on the Department of Primary Industries Women

1[1 Primary Industries Advisory Panel. She has a Bachelor of Business

with a major in Financial Management and a Bachelor of Agricultural

Science and is a past Ru ral Finance scholarship reCipient

Ms Karen Baum Ms Baum is a dairy industry consultant with 15 years experience working

in the industry. She is also a partner in a 350-cow dairy business. Karen

has a Diploma in Business (Human Resources) and Associate Diploma in

Applied Science (Agricultural Services). Karen works on various industry

projects and has a passion for mentoring, leadership development,

careers and attracting/retaining young people in agriculture.

Mr Gaethan Cutri Mr Cutri is a grower, packer and marketer of Cutri Fruit as well as owner

of international export and import company Certified Fresh. He is a

former panel member of Brumby Government's Future Farming Panel

and is a past recipient of the Horticulture Australia Ltd Young Leader

Award, Bayer Crop Science Horticultural Producer of The Year and DPI

Young Farmer of the Year. Gaethan is the preferred candidate of the

RASV. Mr Cutri has a Bachelor of Laws and Bachelor of Commerce.

Mr James Finlay Mr Finlay has extensive profeSSional rural and agricultural experience

and is currently managing director of Neil Clark & ASSOCIates (a business

that provides information and consulting services to leading agribusiness

operations in Australian and globall y). James has a Bachelor of Management

(Farm Business) and an Advanced Diploma of Farm Management.

Mr Finlay is currentl y Treasurer of the Central Victorian Agribusiness Forum.

Ms Debra Tsilfidis Ms Tsilfidis has a strong commercial background, haVing held roles in

Buyi ng, Business Development and StrategiC Marketing with Shell, Franklins and Coles Supermarkets.

Debra is a past Board member of the Corangamite Catchment Management

Authority and the VFF's Young Agribusiness Professionals Committee.

Ms Tsilfidis has a Master of Marketing and in 2009 she partiCipated in the

Australian Rural Leadership Program.

STATUTORY ROL~

Pursuant to Section 12(1) of the Young Farmers' Finance Council Act 1979 the functions of the Council are as follows:

+ To encourage the establishment of young persons in farming;

+ To assist young persons who have demonstrated an interest and ability in farming to become established as farmers;

+ To advise and assist the Minister on the development of schemes for the purchase of farming land or improvements by the Council for lease or

sale to young persons, or otherwise to assist young persons to become established in farming.

YOUNG r=ARM~R PROr=IL~

The fundamental requirement of a young farmer is a high level of skill and performance. The profile of the young person, who may qualify for support, is one who:

+ is 40 years of age or under - although exceptions may apply in special circumstances;

+ possesses high personal attributes;

+ has suitable experience and training in the type of farming to be pursued;

+ has an ability to manage financial affairs and accumulate savings;

+ possesses an established track record, demonstrating potential to be successful in the proposed venture;

+ is in genuine need of concessional finance - having regard for available

resources in the family farming unit;

+ is personally involved in the day-Io-day operation of the land purchased.

THt;: V t;:AR IN Rt;:VIt;:W

The 201 1/12 season has seen extreme variances in seasonal conditions across the state delivering mixed fortunes lor

Victoria's primary producers. After a relatively dry winter much needed rain fell across the state leading into Spring which

was just in time for the northern broadacre areas and also welcomed in the southern grazing and dairy areas which had

experienced one of the wettest years in recent times. This was followed by a mild lead up to early summer which saw

harvest finish in quick time especiall y compared to the drawn out 20 1 0/1 I harvest, with good quality and higher than

average yields being received.

Unfortunately the price for cereal grains at harvest was relatively low resulting in large tonnages being stored for sale

throughout the year. Higher value crops such as canola were cashed at harvest. Flooding affected the North East in

February and also Gippsland in June creating management issues for farmers in both regions; contrary to this the South

West of the state remained dry leading into winter.

In 2010/11 the Young Farmers' Finance Council submitted a report to Government to boost the amount of funding

available for the Young Farmer Finance Scheme by fifty per cent, from $15M to $22.5M. The approved increase was the

first for the program since 1994. The boost reflected the increasing land and property prices over that time, and enables

Rural Finance to administer more funding for this worthwhile program

This increased level of funding for the Young Farmers' Finance Scheme was fully utilized, highlighting the continued

strong appetite for finance among Victoria's young farmers.

In 2011/12, one hundred and one loans providing $22.5M of Young Farmer Finance were approved. This amount

included $4.42M of One 2 Grow which attracts half the subsidy of the full Young Farmer Finance concession given it

allows for young professionals to partake in the scheme as they take a step into farm ownership whilst continuing to

support their income through working off-farm. Of the total number of loans approved, 34 loans with total subsidies of

$8.1 I M was provided to young broadacre farmers and 27 loans with a total subsidy of $6.32M was provided to the dairy

industry. The remaining $8.07M was well spread across other industries.

LOAN r=ACILlTI~S

Purchase of Stock & Equipment

Finance is provided for the purchase of stock and equipment to enable the recipient to fulfil contracting, leasing or sharefarming arrangements.

Applicants are expected to hold suitable tenure for these activities.

A reasonable contribution from the applicant's own savings is desirable, as well

as a demonstrably sound knowledge of the industry in which they are involved.

The term of these loans is up to eight years, with a concessional interest rate of two per cent below the commercial rates of Rural Finance applicable for

the first three years. Commercial rates apply for the remainder of the term.

In 201 111 2, fifteen loans were approved for the purchase 01 stock and

equipment, totalling $ 1.73M.

Land Purchase

This category provides funding to assist applicants with the purchase of their first commercially sized operation. For existing landholders,land may be

purchased to add to the existing base to enable it to become an economically sized farming unil

Applicants involved in sharefarming or lease arrangements may also purchase land, provided the overall enterprise is likely to be profitable.

Young farmers already involved in a family farming partnership may participate provided the land to be purchased is registered in the name of the young

farmer and the aggregate amount of land is suffiCient for the number of family members involved.

Loans are repayable over 15 years, with a concessional interest rate of two per cent below Rural Finance's commercial rates for the first five years.

Commercial rates apply for the remainder of the term.

For 2011/12, sixty four loans were approved for land purchases

totalling $18.57M.

One 2 Grow

Finance is available for suitably qualified young farmers to purchase their first

block of land as a first step towards owning and operating a commercial farm.

Applicants are required to meet the general eligibility criteria under the Young

Farmers' Finance Scheme. Ideally the land being purchased should be of a

scale that is at least 20 per cent of a productive commercial farming unit and be capable of generating sufficient income to meet repayments. The young

farmer has to have an adequate level of supporting income to meet living and

operating expenses.

Loans are repayable over a period of up to 15 years with a one per cent discount on the Rural Finance's commercial rate for the first five years.

In 2011/12, twenty two loans were approved under this category for $4.42M.

Number of Loans and Net Approvals 2011/2012

ONE2GROW LIVESTOCK & EQUIPMENT LAND PURCHASE TOTAL

No. $000'5 No. $000'5 No. $OOO'S No. $00 0 '5

Beef 7 650 60 300 9 1,0 10

Broadacre Cropping 5 444 4 470 25 6,755 34 7,669

Dairy 4 560 8 1,042 13 3,835 26 5,697

Intensive Cropping 120 120

Prime Lambs 2 245 12 3,590 14 3,835

Viticulture 2 500 2 500

Wool 80 5 2, 150 6 2.230

Intensive Animal 250 250

Vegetables 55 255 2 310

Fruit

Mixed Farming 2 174 36 3 670 6 880

Non Farm Business

Total 22 2,208 15 1,728 64 18,566 101 22,502

Number of Loans and Net Approvals from November 1980 to 30 June 2012

STEPPING STONE' LIVESTOCK & EQUIPMENT LAND PURC~ASE TOTA L

O NE 2 GROW'

No. $000'5 No. $000'5 No. $000'5 No. $000'5

Beef 26 2,266 7 653 56 9,297 89 12,2 16

Broadacre Cropping 89 8,457 18 907 646 95,109 753 104.473

Dairy 64 4.9 20 3 19 15,552 443 69,825 826 90.297

Intensive Cropping 50 2 130 4 670 7 850

Prime Lambs 12 1,701 6 425 50 10,437 68 12,563

Viticulture 5 300 28 3,385 33 3,685

Wool 59 3,532 14 574 128 19,584 201 23.690

Intensive Animal 2 152 7 840 9 992

Vegetables 5 2 12 5 213 16 2,910 26 3,335

Fruit 6 1,300 6 1.300

Mixed Farming 3 324 36 5 1.270 9 1.630

Non Farm Business

Total 266 21,914 372 18,490 1,389 214,627 2,027 255,031

Note Stepping Stone operated from 198 1 to 1994 while One 2 Grow was introduced in October 2007.

Both products have similar objectives and statistics and have therefore been agg regated.

T~STIMONIALS

Darryll-1oey Fourth generation dairy farmer, Katunga, Victoria

For fourth generation farmer Darryl Hoey, of Katunga, it was a move to Victoria (from Queensland) in 1993, to accept a share-farming opportunity that introduced him to the Rural Finance Young Farmer Finance Scheme. After share-farming for about nine years, Daryl then purchased his own farm in 2002 which he has progressively expanded upon over the years.

Upon reflection Darryl says that he was always going to be a farmer but it's only been with the support of Rural Finance that he's been able to realise that dream in its own right.

Having been a client of Rural Finance's for the past twenty years has been positive for Darryl who says that it's much easier to work with someone who

knows your business and understands the philosophy behind it.

"Having a reduced interest rate for the first few years is certainly a big help in that it gives you room to move - it's been a great scheme and there should be

more like it; said Mr Hoey.

In terms of advice to other young farmers who might be interested in the Young Farmer Finance Scheme, Darryl says that the best thing to do it

surround yourself with good advice from other successful farmers and try to operate a risk-adverse business investing in appreciating assets, rather than those that depreciate.

Mark and Monique Bryant Second generation farmers, Kaarimba

Mark and Monique Bryant have been farming together in their own right for the past six years, after using the Rural Finance Young Farmer Finance Scheme to raise equity which has enabled the purchase of their home farm.

The Bryant's describe their effort as a team one, in which Mark is very hands-on with farm duties, whilst Monique divides her time between the book- keeping and rearing calves as needed.

After raising some of the required equity but without regular cash flow, the

Bryant's relied on the Young Farmer Finance Scheme to get established; with those funds they were able to invest in infrastructure and established their farm to a standard that will enable production for the next decade.

During the time of drought and milk price crash Rural Finance

has 'come along for the ride' with the Bryant's as they've made their way as independent farm operators.

"The Young Farmers Finance Scheme is something that you should

really look at because you can have a reduced interest rate for the

first couple of years, when you really need it" says Monique.

The Bryant's say that everyone's definition of success is different but as

long as you are enjoying what you're doing and have faith in the direction that you're heading, success will come and they're on the right track.

"The Young r=armers r=inance

Scheme is something that you

should really look at because

you can have a reduced interest

rate for the first couple of years,

when you really need it."

T~STIMONIALS

"Rural i=inance has been really

good to me a nd if you ca n meet

the criteria for the Young i=al-mer

i=inance Scheme then go for it."

Andrew Balfour Dairy farmer, Willow Grove

In 1992 when Andrew started share-farming, he didn't own a cow or a

motorbike or a tractor and that's when Rural Finance came on board with the

Young Farmer Finance Scheme.

After a few years the opportunity to purchase property in his own right came

along and Andrew used the Scheme to get started. Since then, his relationship

with Rural Finance has continued and today he milks 650 cows on his own

property as well as having a share in another farm that milks 300 cows.

At the current time he's pleased with the way the farm is working; a couple

of good seasons and a few step ups in the milk price has enabled some

investment in infrastructure and that's paying dividends in terms of production.

"Rural Finance has been really good to me and if you can meet the criteria for

the Young Farmer Finance Scheme then go for if', says Andrew.

He says that those keen to get into farming shouldn't be scared to take a

risk, to back themselves and have a go. In terms of advice he recommends

surrounding yourself with other good farmers and learning from them.

Tyler and Kate Nelson Grain farmers, Boort Victoria Tyler Nelson was introduced to Rural Finance through the Rural

Finance scholarship program which he successfully applied for while still at university.

At the conclusion of his studies, Tyler and his wife Kate looked at adding

to the existing family landholding by purchasing their own land and when an opportunity arose, they spoke with Rural Finance about finance.

With the assistance of the Young Farmer Finance Scheme the Nelson's

were able to secure funds at a reduced interest rate which enabled them to purchase a little more land so that the purchase was big enough to support another income.

In addition, the Nelson's have leased some additional land and become involved in a share-farming arrangement. Their plan is to improve existing

infrastructure so that they can explore the opportunity to diversify into livestock into the future.

Tyler sees farming as a diverse and challenging career; one day he might

be using agronomy skills in the paddock; the next day he might be a mechanic fixing a tractor or header, before going into the home office at night to be an economist.

'We're looking forward to being involved in the agricultural industry," says

Tyler, "we're lucky enough to be getting set up so we can produce nice crops Into the future and we're excited about what the future holds". Kate agrees.

"We're look ing forward to being

involved in the agricultural

indu stry, we're lucky enough

to be getting set up so we

can produce nice crops into the future and we're exc ited

about what the future ho ld s"

rR~~DoM or INrORMATION

The following statement is provided pursuant to the Freedom of Information

Act 1982.

Categories of Documents

Minutes of meetings and copies of correspondence are maintained by

the Administrative Officer, and are held at the offices of Rural Finance,

57 View St, Bendigo 3550.

Published Information on 1=01

A statement on organisation and functions is published in summary form

within the Victorian Government Directory.

A statement on categories of documents is available for purchase from

the Council's nominated officer and for inspection at the officer's place of

employment (as listed below). A statement regarding FOI arrangements is

also available, free of charge, from the Council's nominated officer.

STAT~M~NT or ~XP~NDITUR~

I=or the year ended 30 June 2012

1=01 Access Arrangements

Access to information is obtainable on written request as detailed in Section

17 of the Act. All applications should be on the prescribed form, which is

available from tile Council's Freedom of Information Officer, Rural Finance,

57 View St, Bendigo 3550.

All requests will be promptly acknowledged and advice given as to access

arrangements and appropriate charges

Nominated Officer Of The Council

Request for access to documents held by the Council under the Freedom

of Information Act 1982 is the responsibility of the Council's Freedom of

Information Officer, Mr P Goffin.

Requests should be in writing, on the prescribed form, and addressed to:

Mr Peter Goffin Freedom of Information Officer Young Farmers' Finance Council c/o Rural Finance Corporation of Victoria 57ViewSt Bendigo VIC 3550

Expenditure in accordance with Sections 4 and 10 of the Young Farmers' Finance Council Act 1979 in relation to services provided by Rural Finance is as follows:

2011 2012 $ $

Rem uneration of Members 2,711 1,122

Administrative and Secretarial Services 1,600 1,700

Travel and Meeting Expenses 3,041 2,447

Marketing and Promotional Activities 1,205 1,443

Total 8,557 6,712

a UNG FA~caUNCil

Young Farmers Finance C ouncil

clo Rural Fin nee

5'7 View Strecl, Bendigo, Victoria 3550 Tt' (03) 541\ 2600 r . (03) 544 I 8901

Wet, www.lUlalflllance.com.au