How brokers can make their mark in agribusiness

City people would not normally associate the word "brokerage" with tilling land and farm equipment. But a number of brokers have been involved in the agriculture business, or agribusiness, for quite some time.

Justin Barnes, director of Finagri, sheds light on what this business is all about in an exclusive interview with MPA.

Barnes has worked in agriculture banking portfolios for over 11 years. He and his wife provide financial services and guidance to businesses in rural communities that deal with land, labour, weather, machinery, and markets.

A season of difference

Agribusiness is a totally specialised area of lending that most banks dedicate specialists and credit teams to, according to Barnes. While looking at the historical performance of a family business is important, checking the family's projected cash flow requires equal concern.

Their future cash flow might change due to crop yields and prices. And this would entail, at times, updating banks on cash flow variations two to three times a year, depending on how the season progresses.

Rain is one the biggest challenges in agribusiness. During times of drought, income can reduce significantly. In times of flood, crops can be wiped out just as they are about to be harvested. "It takes specialised knowledge to assist clients put a deal together, especially if business expansion is on the table," Barnes said.

Getting into the business

"Get a better feel for the business. Look around the property and talk about issues over the kitchen table with a cup of coffee," Barnes suggests to brokers who want to venture into agribusiness.

Apart from bank and business trends, they also need to keep themselves updated with new machineries that come out in the market that drive efficiencies and could boost profits on a farm.

When it comes to knowing one's market, Barnes suggests not going far. "My experience and expertise is right here in my area— not 500km away where I don't know the place well enough to make a call on a character, cash flow, or asset," Barnes said. 

As in any brokerage business, maintaining a stable offering and providing excellent service remain the golden rule in agribusiness. And if there's an opportunity, give back to the community that supports one's business. Barnes supports his by sponsoring picnic races, local crickets and junior rugby union teams.