Sure, machinery is a big investment, but no farmer gets by without it. We got the lowdown on making smart choices.
Investing in agricultural machinery is no small decision for farmers, and finding the right finance option can make all the difference. From upfront costs to long-term commitments, there’s a lot to consider. To help unpack it all, we spoke with Matt Dowling, Managing Director of Financial Services at CNH Industrial Capital for Australia and New Zealand,
to get his expert take on the best options out there.
How can CNH Industrial Capital help farmers?
We provide financial solutions for our dealers in Australia and New Zealand, as well as retail
customers through the dealer network. Our solutions cover both wholesale and retail finance facilities for agriculture, as well as construction and commercial vehicles, including the IVECO brand. We tailor solutions to meet customer needs, such as rescheduling payments to align with their more productive seasons or better cash flow periods, like after harvest. We offer the most competitive interest rates available and ensure good stock levels and turnover with our industrial colleagues and dealers, so we’re confident we offer the best rates in the market.
How do you do that?
Right now, there are many strong finance programs available. We work closely with industrial partners to create tailored finance solutions for specific equipment, like combines or sprayers. We analyse the market, gather dealer feedback, and design programs that help both dealers and customers obtain the best finance solution possible. Our goal is to offer the best financing options that fit each customer’s unique needs, whether they want a higher deposit for a lower interest rate or a flexible payment structure. We excel at customising solutions to meet different customer situations.
How much can the investment in machinery vary?
We cater to all sizes and types of retail customers, from large corporate accounts to hobby
farmers who might need just one or two tractors a year. We also support dealers with floor plan facilities, which can be over $100 million depending on the size of the dealership. These facilities contribute to the financial stability of a dealer’s business while maintaining an ideal amount of inventory for long-term growth. On the retail side, we finance a range of equipment for our brands, from combines costing over $1 million to a small low horsepower tractor priced around $60,000.
Have you seen a shift in the need for finance or changes in the industry in the past decade?
Not much has changed regarding the types of finance solutionswe offer. However, as a captive financier, we have the advantage of knowing our customers and the agriculture industry really well.
We understand that farmers face cycles of drought and floods, so we can talk to them and support them through tough times. Unlike some other financiers, we offer flexible solutions, like rescheduling payments and structuring plans to help them during difficult periods. We work closely with our dealer network to better understand the end customer’s needs. We often call customers directly, especially in cases like floods. For example, during the Lismore flooding, we reached out to
all affected customers to offer support. They appreciate this, and it helps build long-term loyalty, but we do it because it’s the right thing to do, not for recognition.
What have been the biggest financial challenges in recent years?
Recent changes, especially over the last three or four years, include higher interest rates and increased input costs post- COVID. These factors have made it difficult for our end customers to manage their costs. As interest rates remain high, the challenges within the community are becoming more prevalent, and we need to address them.
What should farmers consider when choosing between different finance options?
There’s not a huge range of financial solutions — it’s quite simple from the fact that usually, it’s a straightforward goods mortgage. Farmers make a deposit, receive an interestrate, and then make regular payments for three to four years. At the end of the term, they own the asset. This works for 90 to 95% of our customers. Sometimes, we use finance leases, operating leases, or hire arrangements where we retain ownership and the customer pays to use the asset, which we then take back at the end of the term.
Which option is more beneficial?
Owning the asset helps their balance sheet by adding value for further lending. Once paid off, they can resell the asset, potentially making a profit if the market is favourable. Ownership provides more options at the end of the finance term.
What’s the benefit of leasing?
If they only need the asset for a short period or want to test it out, an off-balance-sheet
option is better. It’s a little bit of a trial before you buy. It suits situations with uncertainty and avoids committing to a purchase. But most farmers we work with are experienced and generally prefer goods mortgages since they know how to manage farm assets.
Do farmers lease equipment to stay current with the latest machinery?
No, operating leases aren’t commonly used in agriculture. They’re more common for commercial vehicles. Farmers usually prefer to own equipment after thorough research on its capabilities and finance options. Manufacturers and dealers might offer subsidies to help with the cost, but new
generation equipment is typically financed with a mortgage or similar asset-based financing.
What’s the best way for South Australian farmers to get financing help?
I’ve been with CNH Industrial Capital for five years, and before that, I was the Chief Credit Officer for Asia Pacific, covering China, Russia, India and Thailand. This global experience has shown me how different regions have unique finance needs, so talking to the right people is crucial. We’ve recently identified a need to have a Capital expert closer to the ground in South Australia, where Corey Jensen will be based. Corey, who previously worked at CBA, will work with local dealers and end customers, and he’ll be very happy to chat through the best ways of going about it all. If you’re interested in discussing financing options, reach out to your local Ramsey Bros team. We’re looking forward to helping more of our local farmers.
Do farmers lease equipment to stay current with the latest machinery?
No, operating leases aren’t commonly used in agriculture. They’re more common for commercial vehicles. Farmers usually prefer to own equipment after thorough research on its capabilities and finance options. Manufacturers and dealers might offer subsidies to help with the cost, but new
generation equipment is typically financed with a mortgage or similar asset-based financing.
What’s the best way for South Australian farmers to get financing help?
I’ve been with CNH Industrial Capital for five years, and before that, I was the Chief Credit Officer for Asia Pacific, covering China, Russia, India and Thailand. This global experience has shown me how different regions have unique finance needs, so talking to the right people is crucial. We’ve recently identified a need to have a Capital expert closer to the ground in South Australia, where Corey Jensen will be based. Corey, who previously worked at CBA, will work with local dealers and end customers, and he’ll be very happy to chat through the best ways of going about it all. If you’re interested in discussing financing options, reach out to your local Ramsey Bros team. We’re looking forward to helping more of our local farmers.
