RIC CEO interview with South Australia Country Hour - help for farmers


SELINA GREEN: Well, have you heard of the Regional Investment Corporation or RIC as it's also known? It's an Australian Government farm business lender that offers low-cost loans to farmers or those running farm-related small businesses. And it may be an option for those looking to refinance some existing bank loans. It's particularly an option when it comes to drought, natural disaster, flood and bushfire preparation and recovery. John Howard is the CEO of RIC. He'll be at tomorrow's GrowingSA conference in Adelaide, but he also joins me now, John Howard, good afternoon. Welcome to the country hour. 

​JOHN HOWARD: Thanks very much Selina, great to be here. 

​SELINA GREEN: Tell me a bit about the loans for farmers. How exactly do they work? 

JOHN HOWARD: The RIC, as we refer to ourselves, which is Regional Investment Corporation, we are a Federal Government body that provides concessional lending into AG. So, essentially those loans are here for drought or disaster relief recovery or even AgriStarter. So, for those with succession planning or new entrants into land ownership or farm business sort of operations. The nature of our loans, Selina, are a ten-year loan, five years interest only and five years principal and interest, with the principal in that component generally being about a third of it. But the thing that stands out with our loans is the concessional nature of the interest rates. Our interest rates are calculated off the ten-year bond rate and they're reviewed twice a year. So, they're a variable rate, but they're only reviewed twice a year and our current rate is 4.52 per cent, so the degree of concessionality is quite high. 

SELINA GREEN: And so I guess having that only reviewed a couple of times a year being that interest rate, that does give perhaps a bit of breathing space comfort for those who are on that loan scheme. 

​ JOHN HOWARD: Oh, absolutely. If you're managing cash flows and you know that you've got certainty for a six-month period, then that definitely helps. 

SELINA GREEN: What sort of takeup have you had of these here in South Australia? 

JOHN HOWARD: Yeah, sure. So, in South Australia, we've been in operation for five years now, and in South Australia, we've got over $281 million in loans that have been settled to about 2850 different customers of ours.​ 

SELINA GREEN: What is the eligibility for someone to take out one of these loans? 

JOHN HOWARD: We've essentially got four main loan products, so their eligibility criteria are quite different. Primarily you need to have had a drought or experienced a drought over an extended period of time, or a business disruption event of some description. When we look at our Farm Investment Loan, you need to have had a business disruption so that could be a flood or a disease or some other impact that's come on to your business. And the other one with our AgriStarter Loan product is around for those that are in succession planning. So, already there with family operations or are looking at entering into farm ownership, albeit they'd need to have experience in the sector I think the key message though, Selina, is to go to our website on their very clear explanation of the eligibility criteria. RIC, so ric.gov.au. 

SELINA GREEN: Say, for those perhaps who may have had some sort of disruption and whether it is a drought or some sort of disaster, they may be struggling with their commercial lender at the moment alone. They may already have this may be an opportunity to sort of refinance that and give themselves that bit more breathing space to get things back on track. 

JOHN HOWARD: Yes. Look, one of the criteria is absolutely that they have to have commercial debt in place. We can't be more than 50% per cent of their debt portfolio. But the key aim and reason for our loan products is to help people get back on the ground or prepare and recover and set up for the future. And to be able to do that with an element of their debt profile at a concessional rate that just helps them initiate the activities that are required to either recover or to prepare. 

SELINA GREEN: Yeah, and we know with agriculture things can change pretty quickly. It is at the end of the day, still a loan. So, is there support for those who really do, even after this fall behind with the wheels really fall off? 

​JOHN HOWARD: We're very aware of the operating environment that we're in, but we're definitely not a lender of last resort either. It is a loan product that is there to repay. When people go through an application process with us, they have to have the credit and security rating and be able to demonstrate that they can repay that loan and they're in a position too. But having said that, we're very cognizant of the sector and the environment and the role that we're there to play to try and help people recover and work through that period of time and hence the concessional nature of the interest rates that we have in place. But we're there to work with those farmer customers for sure. 

SELINA GREEN: We've got GrowingSA happening this week here in Adelaide and understand you'll be here talking about the role of RIC and how these loans work, but there's also a webinar coming up later in the year for those who aren't at the event. 

​JOHN HOWARD: Correct on both of those. So, really looking forward to getting down there. I'll be heading down tomorrow for GrowingSA on Wednesday conference. We will have a booth there. So, really encourage people to come along and talk to members of our team and myself. And the other one we're doing is on the 25th October. So, this is in relation to our Farm Investment Loan. We're having a webinar which is a great way for people to get in and understand and hear what's required to be eligible for that and what that loan offers. So, encourage people that are interested in our Farm Investment Loan and to be able to dial into or get access to our webinar. They can do that by registering on our web events page. So, again go to RIC - ric.gov.au to be able to register for that event on the 25th October over. 

SELINA GREEN: John Howard thanks for joining us on the country hour and safe travels to Adelaide. 

JOHN HOWARD: Selina thanks very much, look forward to it. 

SELINA GREEN: That was John Howard there, CEO of the Regional Investment Corporation and if you're heading to GrowingSA tomorrow in Adelaide you will see him there.