Pre-pay proves popular

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Jenne BrammerThe West Australian

CBH's Pre-Pay Advantage tool has surged in popularity, with more than $100 million provided in pre-harvest funds to WA growers this year.

CBH financial product manager Jacinta Kelly said there had been a 28 per cent increase in the number of growers using the cash advance service this season.

Meanwhile, the number of growers using Pre-Pay Advantage since its introduction in 2012 has risen by almost 50 per cent.

Ms Kelly said Pre-Pay Advantage was an advance payment available to farmers who planned to sell some of their grain to CBH.

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She said there were three probable reasons for the increased demand this year.

First, the cash advance facility has been lifted from $100 per tonne to $200 per tonne for all commodities, meaning farmers needed to commit fewer tonnes in advance.

Second, the facility has been available since February, instead of July, meaning it provides a good source of working capital funds at seeding time.

"The availability of the cash advance any time from February means the funds are available when farmers are putting their crop in the ground," Ms Kelly said.

"It provides a good source of working capital for the purchase of seed, fertiliser etc."

Ms Kelly said the third reason for the popularity was the competitive interest rate of 5.8 per cent.

Morawa farmer Grant Borgward, who has used Pre-Pay Advantage since its introduction in 2012, said the product helped his business be more flexible in response to seasonal cash flow requirements.

"If there were good rains, meaning the crops then required more fertiliser, you could apply for an increase to your Pre-Pay to help fund more inputs," he said.

This year he applied for Pre-Pay Advantage to access additional funds to cover an increased cropping program.

He said a further advantage of CBH Pre-Pay Advantage over other financial products was that it offered access to cash, whereas many other product were restricted to farm input purchases only.

"What I particularly like is that that CBH, which is buying our wheat, is also helping us to grow and fund the crop," Mr Borgward said.

Under Pre-Pay Advantage growers receive funds and can then choose any CBH pool or cash product to fulfil their commitments, before January 31. The facility is available with a minimum contract size of 300 tonnes.

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