Rabobank jumps the farm gate

By Nick Stride

Friday 28th May 2004

From a six-year-old base in farm lending Rabobank is pushing aggressively into banking business in the wider food, agribusiness and beverage sectors.

The Dutch co-operative financier, with operations in 33 countries, arrived here in February 1998 when it bought Wrightson Farmers Finance. It spent the first three years getting to know the business and the sector before launching into related business lending in 2001.

The bank says it is now the third- largest rural lender. Last year's purchase of AMP's $249 million rural loan portfolio gives it a farm debt market share of 13%.

Business banking manager Mike Taylor said the new push into "beyond the farm gate" banking was a way of leveraging off the existing farm lending portfolio in areas where the bank believes it has several advantages over broad commercial banks.

For one thing, as the Dutch parent is a co-operative, it doesn't have to pay dividends and isn't driven by its share price.

As a branch of Rabobank Australia, funding isn't an issue either. It is the only AAA-rated bank in New Zealand.

And, said Taylor, it was the only food, beverage and agribusiness specialist.

"We understand the industries we're getting involved in domestically and internationally. That means once we're comfortable with a business's credit profile we can offer a flexibility the other banks cannot."

"We're knowledge-based. We do a lot of research, which we're happy to share with our clients."

"We have international intelligence on the wine, meat, poultry, fruit and vegetable markets, for example."

As well as farm and agribusiness lending the bank offers equipment finance, trade and commodity finance, and foreign exchange services.

Its growth strategy is threefold. First, it is leveraging on the existing inside-the-farm-gate client base.

"A lot of our rural clients are directors of agribusinesses such as exporters, processors, wholesalers, packers and storage businesses," Taylor said.

The bank also attends and sponsors industry forums and conferences.

Last, there is "good old-fashioned cold calling" of the top 200 agribusinesses. Rabobank is concentrating on larger loan sizes but it hasn't ruled out lending to smaller businesses.

There seems plenty of room to move. The Ministry of Agriculture and Forestry in 2002 estimated the agribusiness sector, including forestry, was worth $104 billion.

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