Latest / Dollars In The Dirt / #041 - Why Your Herd Records Are Worth More Than You Think at the Bank

Transcript

#041 - Why Your Herd Records Are Worth More Than You Think at the Bank · Dollars In The Dirt

0:00
Your herd records are one of the most valuable assets when securing finance.
0:03
Most producers think banks only care about the land value and
0:07
overall turnover. After helping hundreds of farmers secure over a
0:10
billion dollars in finance, I can tell you that lenders actually
0:13
prioritise detailed herd records. because they prove your
0:17
operational productivity and risk management. So in this video, I'm
0:20
gonna show you exactly what the banks wanna see and how to present your
0:23
records to get the best deal. The first thing to understand is
0:27
what specific herd records banks are looking for when
0:30
you approach them for finance. It's not just about showing you
0:34
have cattle on hand or that you've got a big
0:38
turnover. Banks wanna see evidence that your herd is productive, that
0:41
you're managing the risks that come with running livestock. This
0:44
means they want to see the data that tells the story about your operation's
0:48
efficiency and sustainability. The key metrics that
0:51
lenders focus on include pregnancy rate, weaning rates,
0:55
mortality rates and weight gains. And let's break each
0:59
of these down. Pregnancy rates are a critical indicator of
1:03
herd fertility and overall reproductive performance. A
1:06
high pregnancy rate means you're successfully getting cows in-calf, which
1:10
directly impacts your future income. Banks see this as a
1:13
sign you're running a well-managed breeding program, and if your pregnancy rates
1:17
are consistently above the industry benchmarks, it shows you
1:20
understand herd biology and are applying good management practices.
1:25
This reduces the risk that your herd's productivity will suddenly drop,
1:29
which makes lenders more comfortable with extending finance. For
1:33
a $4 million turnover beef producer in Queensland, maintaining
1:36
strong pregnancy rates is crucial. Queensland's variable
1:40
climate, with its wet and dry season, can challenge reproductive
1:44
performance. For example, during drought periods, nutrition
1:48
can suffer. leading to lower conception rates, producers
1:52
who actively monitor and manage nutrition, perhaps by supplement
1:55
feeding during lean times or adjusting calving seasons
1:59
to match their pasture availability, tend to maintain higher
2:03
pregnancy rates. This proactive approach not only
2:06
improves herd fertility but also signals to lenders that
2:10
you're prepared for environmental variability. Next
2:14
up is your weaning rates. This metrics tells
2:17
the banks how many calves you're successfully raising to
2:21
weaning age compared to the number of cows exposed to the
2:24
bull. A strong weaning rate means you're not just
2:27
getting cows pregnant but you're also raising healthy calves that
2:30
will grow into productive animals. This reflects well
2:34
on your overall herd health, nutrition and management skills. It
2:37
also means your herd is generating a steady income through calf
2:42
sales or retained stock, which supports your cash
2:45
flow projection. In Queensland, where weaning rates
2:49
can be affected by factors such as tick infestations, pasture
2:53
quality, Producers who implement integrated pest management
2:57
and rotational grazing often see better calf survival. For
3:00
instance, a producer who invests in pasture improvement programs,
3:04
such as introducing legumes to boost protein content, can
3:08
see calves grow stronger and survive at higher rates.
3:12
When you present these winning rates to lenders alongside your management strategies,
3:17
it shows you're not just lucky by actively improving your herd productivity. Mortality
3:21
rates are another important factor. Banks want to see low
3:25
mortality rates because it means you're effectively managing
3:29
disease, nutrition and environmental risks. High
3:33
mortality rates can signal poor management or an underlying health
3:37
issue within your herd, which increases the risk for
3:40
financial loss. Demonstrating that your mortality rates
3:44
are within or better than industry averages reassures lenders
3:48
that you're protecting your asset and minimising unexpected costs.
3:52
Queensland producers face unique challenges like tick fever,
3:55
botulism, seasonal floods, all of
3:59
which can have a massive impact on mortality. A $4 million
4:02
turnover operation that has implemented vaccination programs, regular
4:07
herd health checks and biosecurity measures will likely
4:10
have mortality rates well below regional averages. Sharing
4:14
these records of these health interventions alongside mortality statistics
4:18
helps lenders to understand the full picture of your business. It
4:21
shows you're not just reacting to the problem, but actively preventing them,
4:25
which reduces the risk of sudden financial shocks. And
4:29
then finally, there's weight gains. It's a vital productivity measure.
4:33
Whether you're running a backgrounding operation or finishing cattle, consistent
4:37
weight gains shows that your feeding and pasture management
4:40
strategies are working. Banks like to see weight gain
4:43
data because it ties directly to the value you
4:47
can get when you sell your cattle. And if you can improve your weight
4:50
gain efficiently, it means you're maximising returns
4:54
from your inputs, which again reduces the risks in
4:57
the eyes of the lender. In Queensland, weight gains can vary
5:01
widely depending on pasture conditions and seasonal rainfall. Producers
5:05
who use strategic supplementation during dry periods or
5:09
invest in improved pasture species often achieve better weight
5:12
gains. For example, a producer who monitors weight
5:15
gain monthly and adjusts feeding accordingly can demonstrate to
5:18
lenders that their operation is adaptable and efficient. And
5:22
this is especially important when applying for finance to expand
5:25
or upgrade facilities, because it shows you're likely to
5:29
generate strong returns on that investment. Now knowing what
5:32
records banks want is one thing. The next step is presenting those
5:35
records in a way that clearly demonstrates your management capability and
5:39
mitigates the perceived risks. And this is where many producers miss
5:43
the mark. It's not enough just to hand over a spreadsheet or
5:46
a notebook full of numbers. You'll need to tell a story with
5:50
your data that shows you're in control of your operation and
5:53
that your business is set up for success. Start by
5:57
organising your records into clear, easy to understand reports. Use
6:00
graphs and charts where possible because visual data is
6:04
easier for lenders to digest. For example, a line graph showing
6:08
pregnancy rates over the past three years can highlight trends and improvements.
6:12
Similarly, a bar chart comparing your weeding rates
6:16
to regional average can put your performance in context. For
6:20
a beef producer with a $4 million turnover, it's worth investing
6:24
in some time into creating a professional looking report This could
6:27
mean using software tailored for livestock management or
6:31
even working with your accountant or consultant who understands the industry. When
6:34
you present your herd data alongside financial metrics like
6:38
cost per kilogram of gain or return on investment from
6:42
breeding programs, it paints a comprehensive picture. This level
6:45
of detail reassures lenders that you're serious and
6:48
knowledgeable about your business. Alongside the raw data, include
6:52
a narrative that explains what the numbers mean. For instance, if
6:56
your pregnancy rates improved after changing your bull management strategy or
7:00
introducing a new nutrition program, say this, this
7:03
shows you've actively managing your herd and making decisions based
7:07
on the data, which is exactly what lenders want to see. Let's
7:11
say you introduce a new size selection program that focused on
7:14
fertility traits, and over two years, your pregnancy rates
7:18
climbed from 85% to 95%. Including
7:22
this story in your data not only explains The
7:25
numbers, but also highlights your commitment to continuous improvement. Similarly,
7:30
if you shifted your calving season to avoid the hottest months of the year and
7:33
saw better calf survival, make sure you explain that. This
7:37
highlights and demonstrates you're not just tracking numbers, but
7:40
using them to make smart business decisions. It's also important to
7:44
be upfront about any challenges you've faced and how you've addressed them.
7:47
If you've had a spike in mortality rates due to drought or disease outbreak, explain
7:52
these steps you've taken to mitigate these risks and prevent the reoccurrence. This
7:56
honestly builds trust and shows you're proactive rather than reactive.
8:00
For example, if you had a severe dry spell in Queensland that led
8:03
to increased calf deaths, but you responded by sourcing
8:07
supplementary feed and adjusting stocking rates, include that in your
8:10
presentation. Explain how those actions help stabilise
8:14
the mortality rate in subsequent years. Lenders appreciate the
8:17
transparency and want to see how you've learned from these
8:20
setbacks and adapt your management accordingly. Another tip
8:24
is to link your herd performance to your financials. If you can demonstrate how
8:27
improvements in pregnancy or weaning rates have translated into higher
8:31
income or better cash flow, it also strengthens your case. Banks
8:35
want to see that your herd records aren't just numbers
8:38
on a page, but they're driving the financial health of your business. For
8:42
instance, if increasing your weaning rate by 5% out
8:46
of $200,000 in calf sales annually, show that impact clearly.
8:50
This could be through profit and loss statements or cash flow forecasts linked
8:53
to your herd performance. When lenders see that your operational improvements
8:57
have had a direct impact and positive effect on your bottom line, they're
9:01
more likely to offer favourable turns. Before I move on
9:04
to the second point, I want to take a quick pause here. If
9:07
you're looking at purchasing a property or growing your business and you want
9:10
someone generally in your corner to help you get that right, book a
9:13
free call with me. I specialise in helping graziers to secure finance
9:17
that fits your operation and goals. Links are in
9:20
the description. Alright, moving on to the second point. Before just
9:24
presenting your HERD records well, you need to understand how these
9:27
records fit in the big picture of your finance application. Banks
9:31
just don't look at HERD data in isolation. They want to see how your
9:34
operational data integrates with your overall business plan, your
9:37
financial statements and your risk management strategies. This
9:41
means you should be ready to explain how your herd performance supports
9:45
your projected income and expenses. For example, if
9:48
you're applying for a loan to buy more cattle or improve your breeding program, you
9:52
need to show how your current pregnancy and weaning rates justify the
9:55
investment. Lenders want to see that you're not taking on more debt without a
9:58
clear plan to increase productivity and profitability. Imagine
10:02
you're looking to expand your herd by 20%. If
10:05
your current pregnancy rate is 90% and your weaning
10:09
rate is 85%, you can project how many additional calves
10:12
you'll produce and the expected revenue you'll expect off
10:15
these calves. Presenting these projections alongside your existing herd
10:19
data shows lenders You thought through the financial implication
10:23
and that your expansion is based on a solid operational performance. It
10:27
also helps to have your herd records audited or verified by
10:31
a third party, such as your vet or an industry consultant. This
10:34
adds to the credibility of your data and reassures lenders that
10:37
your numbers are accurate and reliable. If you don't already have this
10:41
in place, consider setting this up before you apply for finance. A
10:44
vet who regularly visits your property can provide health reports, confirm
10:48
your mortality rates and effective disease management strategies. Similarly,
10:53
an industry consultant might verify your breeding records or
10:56
weight gain data. This is external validation that can be
10:59
the difference between a loan approval and rejection, especially when
11:03
lenders are dealing with large sums of money. Risk mitigation is
11:06
another crucial aspect. Banks want to know you've thought about
11:10
what could go wrong and have plans in place to manage those risks.
11:14
Your herd records can be part of the story. For example, if
11:17
you track mortality rates and have protocols for disease prevention and
11:21
treatment, explain how these reduce the likelihood of financial
11:24
losses. If you monitor your weight gains closely and
11:28
adjust feeding programs to respond to seasonal conditions, highlight
11:32
this too. For example, a Queensland producer might
11:35
have a drought contingency plan that includes de-stocking strategy or
11:39
a feed budget based on herd weight targets. Including
11:43
this information alongside your herd data demonstrates you're prepared for
11:46
adverse conditions. It shows that lenders, you're not just hoping for
11:49
the best, but actively managing the risk to protect your investment. Showing
11:54
that you use your herd data to make informed decisions demonstrates strong
11:57
management capability and this is a big confidence booster for
12:00
lenders because it means you're less likely to default on your loan due to
12:03
poor herd performance or unexpected setbacks. Finally,
12:08
don't forget to keep your records up to date and consistent. Banks
12:12
want to see a track record, just not a snapshot. Having several
12:15
years of data show stability and reliability. It also
12:18
allows you to demonstrate the trends and improvements over time, which
12:22
is much more convincing than a single year's figures. For a
12:25
$4 million turnover beef producer, maintaining detailed records
12:29
over the last three to five years can reveal patterns that support
12:32
your business story. For example, you might
12:36
show how pregnancy rates dipped during a drought but rebounded after
12:39
implementing new management practices. This kind of data
12:43
depth builds confidence that your operation is resilient and
12:46
well managed. To sum up, your herd records are
12:49
way more than just numbers for your own use. They're powerful
12:53
tools to prove your operational productivity, your management skills,
12:57
your ability to manage risk. By focusing on these key metrics
13:00
that banks want to see, and presenting them clearly and honestly, and
13:04
linking them to your overall business plan, you'll give yourself the best
13:07
chance of securing finance on favourable terms. If
13:10
you're ready to take the next step and want expert help to structure
13:13
your loan and present your business in the best light, book a free call
13:17
with me. I've helped hundreds of graziers just like you to get
13:20
finance they need to grow and succeed. Thanks for listening and
13:23
I'll catch you in the next episode. Thanks for tuning in to Dollars in the Dirt.
13:27
If you've got value from today's episode, make sure to subscribe so
13:30
you never miss the insights you need to grow your business. And if you're ready to stop
13:33
being just another number to the banks, visit Season Finance via
13:37
the link in the show notes. Remember to follow us on socials and catch