Reduced payment terms for grain welcomed

NSW Farmers has welcomed announcements by GrainCorp and Emerald to reduce payment terms when acquiring grain during the 2015 harvest.

The moves by GrainCorp and Emerald seek to meet grain farmers’ need for security of payment following a number of insolvencies within the grain trade which have directly cost industry participants over $50 million.

NSW Farmers Grains Committee Chair Daniel Cooper said: “Shorter payment terms are an important tool for grain farmers to manage the risk of selling their crop and meeting cash flow needs at harvest.”

“Shorter payment terms help farmers to manage exposure to default by a grain buyer by choosing not to deliver to a buyer who is in arrears.

“The decision by GrainCorp and Emerald to respectively reduce their terms of payment to five days end of delivery week and two days demonstrates that these shorter terms can be commercially offered by the trade.

“We encourage other participants in the trade to follow their lead and to offer more immediate payment than the 30 days generally offered for grain sourced on-farm.

“Likewise growers should double check payment terms in contracts before agreeing to a sale and seek shorter terms of payment,” Mr Cooper concluded.

NSW Farmers Grains Committee will continue to look at options that will improve the security of payment for its members. This includes participating in a review of Grain Trade Australia’s Number 3 Contract Confirmation template to seek a reduction in the default terms of trade.
ends

14 October 2015

Contact: Justin Crosby

Phone: 02 9478 1074

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