In The Know: Tom & Mick with Ciaran O'Gorman

Oli Le Lievre 0:01 G'day and welcome to the in the know on the go podcast produced by humans of agriculture. Our podcast is designed to get you across the things that matter in Ozzie agribusiness in a way that's just well, bloody easy to understand. Think of me as a friend that is learning with you as we discover and chat about the topics from farm to fork and even beyond. This week, the boys are back in town tomorrow and MC are in the Big Smoke of Sydney sitting down with probably not allowed to give away their guests anyway, I'm in the room if you haven't seen what Tom and Mick are up to, you can watch a little bit of characters that they are walking around the city in their big hearts, but they are sitting down for what could be well their fourth or fifth edition of the monthly markets. They can't really count. We haven't had enough of them yet. So we'll give them five it could be for that tamo over the year mate Tom Rookyard 0:54 welcome everybody episode five of the monthly markets with Tom and MC. We just decided it was for that I will stick with five it sounds better. I'm Tom Roquette. As always joined us steam colleague, Troy MC. What's happening? Mick 1:06 Truck Hayyan tamo. In Sydney this this week may it's good to be in Sydney. It's Unknown Speaker 1:10 a lot more than than orange. Yeah. Mick 1:12 Not as good as Tamworth. But that is what it is. Exciting. So this week, what have we got on so this week, Alter Ego are the name of Clark Kent, if you've lived in the regional towns of wildcard, more a narrow Bri or in Braille or armado you probably know this bloke and a heavy hitter in the corporate ag world. We've got q&a going and joining us this this week. He's a hard running hard hitting center. Who's played rugby for the Rams the way Bala balls, the blue balls, the Highlanders and St albies. And he's a job and he's renowned for getting through the hard work in and around the rock. Kieran are gonna welcome to the show. Speaker 4 1:50 Thanks me. Thanks, Tom. Thanks to humans bag for having me on the show. Appreciate that. That's a an overblown Mick 1:57 introduction isn't the best one you had? Speaker 4 2:00 by far and away the best I've ever had. It's embarrassing. I was back raw and honest center either just for the record. Really? Someone Mick 2:07 told you tell me your Sena Unknown Speaker 2:09 background turned into hookah by the end of their career Unknown Speaker 2:12 blowout that happens? Mick 2:14 Yeah, the blowout. It's weird. You don't have the same body shape or looks as Tom and Tom was a hookah. Tom Rookyard 2:21 Slip coleg Do you kick off tell us a little bit about yourself, your career and what you do at soccer. Speaker 4 2:26 So upon leaving university, at UNLV, I joined NRB agribusiness to start my I guess my career in agribusiness outside the farm gate, had six years within OB agribusiness, and I've been really lucky to work in some some great organizations, including NAB agribusiness, since that time now been with Stocco in my role as the General Manager of partnerships and distribution for four weeks as at today. Mick 2:55 What does that mean? Good question. Speaker 4 2:57 I'm very much still trying to work that out myself. But I've got a lot to learn. So stuck our we're a livestock financier. We'd like to think of ourselves as the leader in livestock finance, here in Australia and New Zealand. That's all we do. We only do livestock finance, we don't do anything else. And the model that we have developed or that the business has developed, we rely very heavily on our distribution partners, service providers, who are in many instances, agents located across Australia. And I've been really lucky, I guess, in my career in a number of different roles to work closely with the agency network across Australia. And I love that that part of this role. So being the general manager of partnerships and distribution, I work very closely with our agency network and with our distributors across Australia. Our aim is to grow the business and grow the book from where it is today. And our agents and our distributors apply it will play a massive role in that. And I'd like to continue to develop those relationships, strengthen those relationships, look for new opportunities, potentially look at new products down the track as well. Mick 4:00 Outside of agents, who are your distributors, Speaker 4 4:03 we work with a number of brokers, independent farm rural advisors, as well. That probably that's probably covers 90 95% of them, I suppose. 99% of them. Yeah, based in Sydney. Yeah, so basically I'm here, our head offices in Brisbane, where the majority of our staff are located in Brisbane and in Queensland. We have a number of staff that work remotely in different parts of Queensland and commute into the office 234 days a week. And we've got rural livestock managers who are based regionally, so we've got one in central Queensland and one in southern New South Wales, western districts Victoria, and we've got a new starter starting with us in South Australia next week, which is really exciting as well. So I work really closely with those, those team members on the ground as well as what we refer to as our agribusiness finance managers as well as FM's who are sort of spread across the Tom Rookyard 4:59 engineering on the right a little bit, what have you been? Where have you been? How's it all looking? And yeah, Mick 5:03 and what and what have you been doing? Speaker 4 5:05 Well, I guess I've really been trying to make sure I have met as many people as I can, I guess and make sure I can put a face to a name and everyone knows who I am. And I know who, who all our partners are and all our, our clients as well. So that's kind of been my focus over the last four weeks is to spend as much time in the car and on a plane as I can. So I've done a couple of trips out to Central West, New South Wales, northwest, New South Wales, Southern Queensland, southeast, New South Wales was in Northwest New South Wales last week, he didn't come through orange and not tell me. I did actually had a had a night in orange. Sorry, Tom, back to orange next week, for a quick trip, Unknown Speaker 5:46 look forward to not saying Mick 5:48 how would you say the mood and the camps been in those areas, you know, seasonally, and market? Yeah, Speaker 4 5:54 there's definitely a mixed bag in there. Certainly optimism in some parts of the country. And unfortunately, it all seems to Well, fortunately, or unfortunately, whichever way you look at it, our markets really reflect the rainfall and seasonal conditions here and on the East Coast, that, in my opinion, is 90% of what drives drives our market here, maybe maybe even 95%, of what drives the market. And markets are a reflection of sentiment. And at the moment, the sentiment is not great. I think the dry is that we came through in seven, eight and eight, eight, and rightly so have left a very powerful memory for people to deal with. And the long term forecasts are probably supporting that maybe where we're headed again, I personally am probably a little bit more optimistic. And we've certainly got a number of clients that are lucky enough to be in areas where there are they're experiencing really good seasonal conditions. So you know, North Queensland, western Queensland, some of the best seasons I've ever had central Queensland not too bad. You get down to Roma and South East Queensland, very ordinary, Northwest New South Wales, ordinary Central West parts of those central west regions are looking not too bad. Southeast New South Wales, there's pockets down there that are again, having some of the best seasons they've had on record, saying again, in Victoria and O'Malley country was very dry, they received a good drink of rain out of that last change came through it parts of Victoria very wet. So it really depends on where you are. And I guess what your appetite for risk is and and how much trust you place in long term forecasts, I suppose is is what's driving the market at the moment for sure. Mick 7:28 Did you make a stop into Google? Out of interest? Speaker 4 7:31 I did. Yeah. I spent a night in the Duga. Plenty of dry feet out there. But you know, they've had a couple of very good seasons. And I guess people in that country know that it's it's marginal country, and you can't count on it every year. And you know, it's certainly looking dry and starting to get cold out there. Again, Unknown Speaker 7:47 it's a bit of an inside joke. Why don't you share with Mick 7:49 the world wide web? Yeah, and obviously the son of a famous world renowned cattle boy, Miko Gorman, what would make think of the quality of cattle at Goldman pastorals been running out of good Irga? Speaker 4 7:59 Oh, I think I stayed true to form actually, they were picked up in ones and twos and threes and fours over the period of a couple of months last year, thought they will purchase pretty cheap at the time, they were very cheap. And unfortunately, just like most people in the market at the moment, they're very D. And there's no way other than a quick exit, and we'll deal with the pain and hopefully get back into the market at some time. Can't be scared of opportunity here. And that's it, Tom, you've got to have a go. But I guess I certainly don't want to make light of the situation that, you know, we've got a lot of clients that are going through that at the moment. And it's a really difficult situation to be in. But again, all of our clients are really aware of, you know, that's a risk with trading. And that's a risk with markets. And I guess we're you know, I feel really lucky to be working in an organization like stockout. You know, that's the game we're in. And we're here to support our clients through those trades. And, and that's exactly the conversations we're having with with our clients on the ground now, sir. Mick 8:54 Yeah, cool. And then I suppose if we kick it into a positive gear and get into the sales pitch, so to speak, focusing on stop go and you know, there's some probably some opportunities around what products do you offer it Stocco and at what rates do you offer. Speaker 4 9:08 So we have two main livestock finance products that we offer. One is a short term trading product, which is up to 12 months. And the other is what we refer to as our breeder product, which is probably a little less subscribe to predominantly do trading finance. So trading finance is very simply we offer 100% of the invoice amount of an animal. And the primary clearance for that initial purchase is the sale of that animal based on the presumption and the assumption that it's going to be worth more in the future than it is than it is now. Generally, we receive the funds from the agent or from a processor or a feedlot or less any fees and charges levies, we then deduct the initial capital cost of that animal plus any finance charges accrued over the period of the trade. And then we send the balance of funds back to the producer. It's a balance product. So the We actually take ownership and we take security over those animals as opposed to it being a loan product. Something we'll hopefully look at in the future is a loan product. So Stocco last year, were purchased by a New Zealand banking organization, by the name of Heartland group. We've got a really strong and a really great reputation in New Zealand in a number of different alternative markets, I suppose. And I guess we're really excited and feel really lucky to have their backing at the moment. And hopefully, in the future, that backing will allow us to look at some loan products in the future, I think. So that's sorry, the the short term product with regards to rates, they're really anywhere from sort of 12 to 14 is a rough range of interest rates. And that is determined on a case by case basis on the strength of the producer, the asset management experience, infrastructure track record, I guess, normal criteria that you would look at, you know, that any lender would would look at, the interest rates are the same from a breeder to a trader product, the breeder product allows a longer term of that capital. And generally how it works is we look for 25% repayment on the original purchase price every year. So giving a producer four years to pay for a breeding animal, theoretically using offspring or progeny of that animal to repay that 25% plus and one off finance cost every year. So at the end of the four years, they own the animal unencumbered and debt free, that can be paid out at any time can be paid out early for any penalty, or buy across both products. There's no fee, there's no charges and extra hidden fees. We only charge finance costs, there's no fees associated with it. And again, early payouts there's no penalty, clients can pay can choose to pay those facilities or pay those stock out on a per head basis from cash flow and anytime if they wish. Tom Rookyard 11:47 Now, as we touch on pretty volatile markets at the moment, do you see opportunity in the market at the moment? Speaker 4 11:52 Yeah, definitely. And I think encouragingly again, markets are a reflection in my opinion of sentiment and what is being seen on a broader term. And in the last two weeks, we've certainly seen, the volume of invoices being funded, increase. So if I look at that example, alone, that tells me that there's some confidence in the market that we may be hitting, we may be hitting the bottom, and I'm probably speaking specifically about cattle markets here. My experience in sheep and lamb markets is is minimal. So it's not Unknown Speaker 12:22 that hard says Mick 12:24 it's Dotco, weighted towards sheep or cattle set of interests. Speaker 4 12:27 No, we don't have a preference for either. It's very much what suits each individual producer and their operation where their experience lies. Again, a trading product is a 12 month product. And so if you can get in and out of a winery in a 12 month period, which generally speaking season has been permitted, most people do, then it's a very good cattle trading product. And we've got a lot of I don't actually know what the weighting is on our book, or whether it's more sheep or cattle. I don't know those. Don't know those details. But, Tom, getting back to your question, I don't actually, I don't spend as much time in the market and only been new to the business. But speaking with a few of our partners and agents over the last few weeks, given the climate and the outlook that we're looking in, a lot of the opportunities are being seen in that in that weight gain trade. So anything that sort of feed a weight, now stepping out of that, and stepping back into to a lighter animal around, you know, between 250 to 300 kilos under that feed away, you're stepping out of a feeder with three somewhere makers out where food prices are roughly at the moment, mid to low threes, and you can step back into the market, you know, in many markets, you can step back into a 250 to 290 kilo animal, you know, anywhere somewhere around that 270 Turner and 80 cents, and therefore you haven't got to put too much weight on an animal to get it again to a feeder product. If the season does turn really south, I think you're in a much better position. And that's probably where a lot of our clients are seeing an opportunity now if they do have food in front of them to dive into the market, certainly. And again, it's really easy for me to say that sitting here in Sydney, but we are we believe there's a lot of good opportunities in the market. And I think our producers do and our clients and our agents do as well. It's just managing the risk of taking that opportunity on with the food that they've got in the paddock and what potentially falls out of the sky in the next three or four months really, which is I guess that's a seasonal risk that people wake up every year. Mick 14:19 And then I suppose you know, for a khaki sitting at home if we focus on the finance side of things. Can you give us an overview of what impacts the price of money that you guys are lending out? You know, like directly affected by the RBA rate rises? You know, you mentioned it comes back to a certain extent about the strength of your client. Yeah. Can you tell us a little bit about that? Yeah, absolutely. Speaker 4 14:38 Look, we're certainly not immune to an inflationary environment. And the rising cost of funds were the same as any any other financier. But in saying that, you know, again, we're in a really strong position at the moment being backed and owned by the heartland group. In the last well since May 22. I think the number is I think we're 4% is 400 basis points is is where the cash rates gone. We've only just recently raised our rates across the board, and in the last month, by just up to 1%, across the board, so we've, you know, effectively, we've soaked up 3% there that we haven't had to pass on, which, again, we're in a really strong position to be able to do that, which is great. So yeah, the cash rate does affect our cost of funds. And I guess, getting back to your question, how we manage that, and where we see our strength is our ability to manage the risk of the underlying security being the animal. And that's potentially where we see ourselves differing from a traditional funder, or from the big four banks, you know, we have a little bit more comfort, I guess, in our opinion as to how we manage that underlying security. And again, we rely very heavily on our network to help with that. And therefore, you know, particularly at the moment, with the cost of bank funding, climbing, we think we're increasingly in a strong position to offer a really good alternative to producers, for sure. Mick 15:56 And then as a business, do you guys have a position on where interest rates are going? You know, do you think we have we nearly hit the top? Are we going to see a taper off? What's your sort of play? Or look Speaker 4 16:05 on economists? And I'm certainly not now it's my opinion, is that there's a couple more rate rises out there, and that inflation is still going to be an issue here in Australia, maybe driven more so on the supply side than anything else? Will that affect our cost of funds? Look, I can't say categorically will, whether it will or whether it won't. Again, I still think we're in a really strong position. And we've been able to, we've been able to shield our clients from some of that increase, or from a large part of that increase over the last 12 to 18 months. And I think we'll be able to do the same hopefully, in the future. Does that answer that question? Unknown Speaker 16:37 Certainly does. Yeah, that's Mick 16:38 a tip from me, focusing on stock code. You know, again, some of the other lenders out in the market. You know, do you see stockholders and evolution as this is the way forward with offering money to the market? Speaker 4 16:50 No, I certainly wouldn't say evolution, yeah, we see ourselves working really closely with traditional lenders. And with the Big Four, yeah, we'd like to see ourselves as just a part of the team that can help a client out. And if we can help them out, then we'd certainly like to do so. And again, with the heartland group backing us now, they've built a really good business and a really strong reputation in New Zealand. And we like to think that we operate in markets where we are the best or the only and hence why Heartland group decided to back Stocker. And so with that in mind, we certainly don't see ourselves trying to compete head to head in a traditional space with the incumbent lenders in Australia, Heartland group have done some really, they operate in a couple of really diverse markets in New Zealand. And, you know, we think that potentially in the future, we may be in a position to look at other markets here in Australia, but for the time being, we're really focused on what we do, which is livestock. And we still think there's a massive opportunity to be captured in that space. And that's that's where our focus lies at the moment for sure. Mick 17:49 On those other markets, like do you think that could extend into for grain sales or other other ag markets? Where do you see the opportunity? Speaker 4 17:56 No, not at this point in time. There's lots of people that play in that space and they do it really well. And it's certainly not our strength and I don't think we'd be stepping into that space anytime soon. Tom Rookyard 18:06 Very political answer. Look forward to hearing more on that front. A bit of a lot of stuff something we do like to ask everyone what bool or RAM breed a and why. Speaker 4 18:17 Well, just full disclosure for the listeners. I did have access to these specific questions prior to the interview. So I put a bit of thought into it. What bull I think it'd be a Black Bull the bull Mick 18:31 just getting a bit Tilray missed the Speaker 4 18:33 cut and probably should have been cold and made it through and now Thrive you would Mick 18:39 be the top ball of the middle of RSL. Or Unknown Speaker 18:42 real tough on yourself. Unknown Speaker 18:44 Black volleyball Mick 18:45 might. Moving on to the rocky, where do you think it'll be at Christmas? If it's currently sitting around 569? Or, look, Speaker 4 18:53 again, I'm not an analyst by any stretch of the imagination. But I think I'm an optimist. And I think there's lots of lots of strong underlying positivity in particularly in international markets that will strengthen you know, my case to say that, I think Anakee around 700 cents by December is not unachievable at all. You know, again, the AQI is is so highly influenced by climatic conditions and seasonal conditions here in Australia and a 50 cent swing in the AQI in 10 days, as you know, that's not out of the ordinary either. So it's not a groundbreaking prediction, but I believe we're somewhere near the bottom at the moment. And that if we get some kind of average season going forward, I think it can strengthen up to that level between now and then for sure. Tom Rookyard 19:38 Trade lamb indicator currently sitting around 6046 so forth, Speaker 4 19:42 Tom, I couldn't actually answer that question. Tom can probably answer it for you. You'd have a much year zero experience in sheep and lambs to be honest, Tom Rookyard 19:50 would you add 130 cents on the on the current EQI so we'll just do that on on the Train Land. Mick 19:56 I guess then. Tom Rookyard 19:58 Seven 735 European Good from you hear positive for those traders? Unknown Speaker 20:02 No comment on the land index. Tom Rookyard 20:05 We're getting into sort of our quicker fast questions. What kind of stagger you and why? Speaker 4 20:10 Again, I did do a research on this one prior. I think I would refer to myself as a flank steak. When I Googled flank steak prior to this today. It says a flank steak is relatively tough, low in fat, inexpensive, no trimming needed and benefits greatly from marination. Fear that Mick 20:30 I'm not coughing that tough and low in fat, inanimate. For those listeners that don't know gerund is cut from Stein he's an Adonis. This one's done rook yard question. Are you a hanky man? Yes or no? Unknown Speaker 20:43 Absolutely. Yes. Don't leave home without good man Tom Rookyard 20:46 sourcing the Patriot the fridge. Unknown Speaker 20:48 pantry, all sources pantry. Unknown Speaker 20:50 Even the mayonnaise I guess my house Mick 20:52 is in the fridge. That's really somebody or a cobra. Cobra Unknown Speaker 20:57 chips and salad or Virgin mash chips and salad. Mick 21:00 Miguel, you got anything up? All right. And that'll do us. Hello. Tom Rookyard 21:03 That was really fun. Kiss. Thank you for your time. Appreciate it. Speaker 4 21:06 Thanks very much for having me. It's been a lot of fun and good to catch up again with both of you. And thanks for to humans of ag for the opportunity. Mick 21:14 Pleasure eel. Probably the next career will be politics and New England or I can be a local member. For any competition. Thanks, fellas. Back to you all. Oli Le Lievre 21:24 Well, that's it for another episode from us here at humans of agriculture. We hope you're enjoying these podcasts. And well if you're not, let us know. Hit us up at Hello at humans of agriculture.com. Get in touch with any guest recommendations topics, or things you'd like us to talk and get curious about. If you enjoyed this episode, please share it with a friend. Right subscribe, review it. Any feedback is absolutely awesome. And we really do welcome it. So look after yourselves. Stay safe. stay sane. We'll see you next time. Transcribed by https://otter.ai