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Mecardo Blog

Grain Trade Insolvency - a real danger?

Posted by Andrew Whitelaw on 23 April 2019

In recent weeks Lempriere Grain went into administration, taking with it debts of A$18.8m. This is not the first grain company to fold and will not be the last.

We felt like it was an opportune time to revisit counterparty risk in light of recent industry rumours of a number of grain traders at risk.

Is counterparty risk a major issue, and how can you protect against it?

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Topics: Grain market / grain price, Agriculture

Social Licence – it’s a rubbish concept!

Posted by Robert Herrmann on 3 January 2019

“Canberra bubble” has been coined the word of the year by the Australian National Dictionary Centre. Mecardo suggests that the equivalent in 2018 for agriculture is “Social Licence”.

Both are somewhat vague in meaning, although they are regularly trotted out by commentators and the plethora of industry opinionated columnists. We have noticed that “social licence” is now pushed to farmers and other agriculture industry participants as something to be “earned”.

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Topics: Australian wool industry, Australian cattle industry, Agriculture, activists

Agriculture in the age of outrage

Posted by Andrew Whitelaw on 17 October 2018

We inhabit a world of outrage, which has only been amplified by the ability to generate considerable 'noise' on social media. It can seem like agriculture is under constant threat from campaigners with various outrages or causes. 

In this opinion piece we look at the data on public (not activist) interest in several controversial agricultural topics and we will provide some ideas on how we should use the fickle nature of public opinion.

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Topics: Australian wool industry, Australian cattle industry, Agriculture, activists

Leadership and other musings

Posted by Robert Herrmann on 5 September 2018

Leadership is often sought as some sort of pinnacle in a chosen field, something to be aspired to when seemingly other more humdrum accomplishments have been completed.

In fact, this is the deception of leadership, the gaining of leadership is not the end game, it is just the beginning of a responsibility that few are prepared for and most attempt to “learn on the job.”

Whether leading a company, a movement, an industry or a team, good leaders can achieve great things via their team, members or staff. The obvious paradox is that poor leaders can hold back the organisation or team leaving an unfulfilled or sometimes worse situation.

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Topics: Agriculture, management, leadership

The state of farm management deposits

Posted by Andrew Whitelaw on 5 September 2018

Up, down, up, down, down, down & up. Farming is one of the most variable occupations in the world. Our profitability is determined by several factors including drought, pricing & government intervention. Australia is lucky to have access to farm management deposit (FMD) accounts to mitigate the impact of seasonal conditions. In this update we look at the state of FMD accounts at present during the drought.

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Topics: Risk management, Agriculture, Farm management deposits, Drought

Don’t cry over split peas

Posted by Olivia Agar on 26 March 2018

Back in December the Indian government imposed a 30 per cent chickpea and lentil tariff on imports, which would affect many Australian growers. As of March 1st, the tariff was hiked up to 60 per cent. The latest rumours are tipping that it may increase again, anywhere up to 100% in coming months. Headlines have cried a crisis on the Australian chickpea and pulse industry at this devastating blow and lost market.

While this is a significant setback to Australian chickpea, pea and lentil growers and traders, particularly for the 2018 season, the larger concern should be focusing on the state of agricultural production in India and what this might mean in the long term.

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Topics: Agriculture, India, developing world

The risk of getting belted by China

Posted by Matt Dalgleish on 26 March 2018

China has come along way from the “great leap forward” program undertaken by Chairman Mao in 1958 that was aimed to move the country from a largely agrarian based economy into an industrialised, collectively owned global power house. 

The “great leap forward” was widely acknowledged as a dismal failure which lead to periods of famine and economic recession.However, the modern China bears little resemblance to the disaster of the “great leap”.

In this article we take a look at how Australia can change how infrastructure investment is managed, in order to compete on a global stage. 

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Topics: Agriculture, Politics, business, china

“……not calling for the slaughter of white people‚ at least for now”, South African MP.

Posted by Andrew Whitelaw on 23 March 2018

This is an astonishing comment from a leading South African politician. If you have been following the news in recent days, you would likely be aware of the deteriorating situation facing South African farmers. In 2017, 82 farmers were killed, in 423 attacks on farms. So far in 2018 there have been 15 murders and 109 attacks.

What is going on, what is likely to be the impact of these actions, and should they learn some lessons from neighbouring Zimbabwe?

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Topics: Agriculture, Politics, africa

Flaming frost, Flipping wind, dastardly dry, blooming rain – Is there anything we can do about it?

Posted by Andrew Whitelaw on 22 January 2018

Anyone who has worked in Australian agriculture for more than a couple of days will have heard one of the above, albeit most likely with stronger adjectives.

If there is one guarantee for farmers in Australia it’s that we are at the mercy of the gods when it comes to weather. In such a big country, there will always be an area where something will be going wrong with the weather.

Many of you will have heard about multiperil crop insurance, but what about weather insurance & derivatives. Are these a suitable risk management option for protecting against the weather?

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Topics: Risk management, Agriculture, insurance

Corporate Ag Investment: "Doing the right thing"

Posted by Robert Herrmann on 13 January 2018

Long term food producers (farmers) have noticed the positive sentiment that’s been rolling over the ag sector in recent times. An evolving situation of increasing world income, a growing population – particularly the wealthy middle class; greater appetite for amplified consumption of protein, and an at best constrained capacity for increased productivity (at least in the traditional sense), all suggest a cautiously positive outlook is here.

Corporate ag investment, could provide opportunities for co-investment or alternatively is this the time to cash in on years of diligent and painstaking investment in the family farm? Other than financial returns what other factors are investors taking into account?

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Topics: agriculture debt, Agriculture

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