In 1997, the key concept developers of AACL identified a need to link investors with Australian family farmers.

This resulted in the development of AACL’s Grain Co-Production product providing:

• Access for farmers to an alternative source of capital outside debt.
• Sharing of risk with third parties.
• Access for investors to a direct agricultural investment without the need to own the land or possess agricultural experience.

GCP involves partnering farmers with investors to grow crops and is effectively an extension to the principals of share farming. Investors provide funds to grow wheat, barley and canola crops and farmers provide the land, equipment, inputs and expertise. The risks and rewards of growing the crop are shared by the farmer and investor, with farmers provided with incentives to outperform agreed benchmarks.

For farmers, participation in GCP Projects provides cash-flow and income protection outcomes that are otherwise unavailable to Australian grain farmers.

Feedback from investors has signalled a need for more consistent returns while farmers and rural consultants provided feedback that the cost and structure of the product needed to be addressed.

In response to this, AACL has restructured GCP to:

• Address farmer cost concerns.
• Simplify GCP to provide cost effective administration and greater levels of understanding by farmers and investors.
• Provide consistent returns to investors.

AACL continues to develop GCP in response to the requirements of both farmers and investors.

How Can Grain Co-Production Benefit You?

Income Protection

GCP provides farmers with a guaranteed amount of income on a contracted area of their farm each season. The majority of the payment to farmers is made at seeding time, underwriting their cash-flow regardless of the season.

Should the contracted crops under perform or fail then the farmer does not suffer all the loss. The investors’ funds provide a form of income protection to the farmer by sharing the risk of growing the crop with the investor.

AACL contracts crops in many different locations and pools the result in order to manage the investor’s risk of growing grain in one location.

In the better seasons the farmer will give up an amount of income to the investors however, farmers will experience more consistent year by year cash-flow over the long term period (see example below). By stabilising cash-flow, regardless of the season, GCP enables farmers to make more proactive decisions knowing that their downside risk is effectively known.

Reduced Peak Debt / Leveraging

The funds provided by investors in GCP increases the farmer’s cash-flow and replaces part of their normal seasonal borrowings to ensure that farm equity is protected.

 By reducing the level of peak debt and providing guaranteed cash-flow, GCP enables farmers to better utilise their borrowing capacity to drive a range of business objectives, such as farm expansion.

The chart right uses financial information from an actual 2011 season GCP farmer contract. It shows the proportion of farmer funds at risk of loss without a GCP agreement in place versus the proportion of farmer funds at risk if their cropping program is contracted with AACL.