Flexibility is at heart of Cargill finance account
Flexibility is at heart of Cargill finance account
A NEW finance scheme, devised to ease farmers cash flow problems, is being launched by merchanting group, Cargill.
Claimed as an industry first, the Cargill 365 account operates as a credit facility and an instant access deposit account in one. Farmers can pay for their inputs on one side of the account, while the money from any grain sales to Cargill goes straight into the deposit facility on the other.
"Falling cereal and milk prices, together with the recent rise in interest rates, have put real pressure on profits and cash flow," says Nick Evans, assistant general manager of Capital Bank – the Bank of Scotland subsidiary which is administering the scheme. "I am convinced it is cash flow that will be the major problem for farm businesses."
This is already evident from the number of farmers who are reluctant to sell grain at current prices, but are having to fork out for inputs, says Cargill general manager, Mark Aitchison. The new 365 account will give them the flexibility to pay for inputs after the grain is sold, and also to earn interest on any deposits made.
The use of supermarket technology – Electronic Data Interface – will allow instant transfers to take place. Farmers buying inputs will receive a monthly statement and have 14 days to settle, or else face interest charges of 2% above base (currently 7%).
Any crop sales to Cargill will be paid electronically into the instant access deposit account, to start earning interest. "There will be no more cheques behind the mantelpiece with this system," says Mr Aitchison.
Interest will be paid monthly up to a maximum 0.5% below base rate, currently equivalent to 6.7% when compounded to an annual rate for accounts in excess of £200,000. A more modest £30,000 deposit would currently earn 5.1% interest compounded over 12 months.
Account holders will be issued with a cheque book and an ATM card to use against the account, and will be able to write up to 48 cheques a year, before charges are imposed.
Farmers will be free to add to the deposit account from other sources. "If the farmer wanted to pay his Dalgety grain cheque into the Cargill 365 account he could," says Mr Evans. Confidentiality will be maintained – Cargill will not know how much any client has on deposit. But a minimum balance of £1000 is required.n
Mark Aitchison: Cash flow problems can be eased with Cargill 365.