Rural Australia

While Elders may have tidied-up some of its debt, apparently it still has a large whack to go. i.e. It has sold-off the AACo stake, sold-off the auto business, and now also sold-off the Insurance business. And still has large debt! Gee, makes you wonder why people at the top of these companies responsible for getting them into these situations are ever lauded at industry events, doesn’t it!



The remaining debt is still concerning the analysts. And if that’s the case and there’s not a lot left to sell and not a lot of free cash-flow to deal with the debt replayments, then perhaps on a local level it’s not even as well off as your family-owned local independent. Will there be pressure applied to the local Elders agencies from where all of the cash has to come now that it’s not getting any more from other sources? And if so, what form will the pressure take?



A few other thoughts here too. Elders is listed on the ASX which brings with it more pressures. ie. It has just appointed a new COO and new CIO. These might be necessary for large organisations but their costs, along with that of the CEO, the various adminstration staff, office leasing costs etc etc add to the burden for which the local independent doesn’t need to account.



Before their ‘troubles’ both Elders and Landmark had begun their ‘fee-for’service’ models. e.g. $2.50 per ear-tag added and $2 per head for scanning. And I guess in a user-pays, capitalistic economy, that’s a fair thing if you want to cover your costs and be sure you can keep your business alive. The header mechanic doesn’t fix your rig and hold-over payment til the crop cheque is in, so why shouldn’t the agent be paid as they go. What this approach may affect however, is whether the value is in the 5.5% selling fees if it’s just covering loading and sale day.



What do you think?


Please leave your comment below.