CORPORATE OR COLLABORATIVE?Matthew Dart – Director DB Ag.“Felix Farm” Ariah Park NSWM: 0428 112 026 E:matt.dart@dbgroup.com.au W: www.dbgroup.com.au

BACKGROUND

Raised on family property “Brunker Hill”, Merriwagga Southwest NSW, family owned 3 generationsEducated at Yanco Ag. and Sydney Uni. completed an BA Ag Ecos (Hnrs).Agribusiness Manager with Westpac (3yrs) & Rabobank (6yrs)

BACKGROUND

Married Samantha in 2000, have 2 childrenSam & I purchased “Bunda Park” Merriwagga in 2000, and “Felix Farm” Ariah Park in 2002 and started full-time farming

Sophie & Zac

2007 - A ‘POINT IN TIME’

Poorest conditions seen in 100 yrs (possibly ever!)Followed 4 out of 5 yrs of poor seasonal conditionsCommodity boom left hedged business open to speculative losses due to poor productionLarge increase in input prices Pending deregulation of the wheat marketResignation of a farm managerIndication that the older generation was to retire

REVIEW FOLLOWING 2007

Review was conducted internally and in consultation with professionals servicing the business.

The following needs were identified:Reduce financial stress caused by poor seasonsEffective generational shiftManagement options were being constrained by capitalIntellectual property was “leaking” out of the businessCapital requirements were large and ongoingOperations were fragmented and efficiencies available

Requirement to affect growth & investment, secure IP and facilitate business exit.

ACTIONS FOLLOWING 2007Formed the DB Group, initially incorporating 3 family farming businesses along with a seed agency and retail business, since added an additional family farming businessBusiness structure is a simple limited trustLand is leased from owners providing fixed or variable income streams as selected and providing certainty of access to the land through formal arrangementsManagement positions held by equity partners allowing IP to be held in the business

ACTIONS FOLLOWING 2007

Cropping operations expanded and moved to a mix between owned and managed.Enterprise mix narrowed and refined through external expertise.Machinery upgraded to current technology and a replacement program put in place. Management and contracting services marketed through a web site.Installed a skills based advisory board to provide external influence on decisions made.

CURRENT STATUS

Managing 5 major holdings totaling 16,000ha spread over 300kms – Merriwagga, Binya, Mirrool, Ariah Park & CaragabalDryland cereal & oilseed production of 11,500ha annually and sheep flock of 4000 ewes.

CURRENT STATUS

4000 ha of property under a farm management contract.Retail operations conducted at Griffith Feed & Grain –general stock feeds and equine supplies.Pioneer agency maintained through the MIA, CIA & Northern Riverina.Current staff consists of 4 working equity partners and 12 staff.

RESULTS FROM 2007-2014

Increased area managed 2,500ha to 16,000haChanged cropping focus from 100% risk to distribution between ownership & managementHas resulted in machinery cost being reduced by some 40% and risk further offset by contracting.Production risk has been reduced.IP has been expanded and maintained, allowing a quality of life change – being able to leave the business.

SWOT

Strength & Opportunities: survival & viability:Skilled management secured via shared equity modelCorporate structure for continuity across generationsScope to analyze and implement technology & practicesScale provides ability to negotiate input pricing and supplyOpportunity to attract non-bank forms of capitalGeographical risk spreadEconomies of scale in machinery and IP costAllows ability to facilitate intellectual property sales

SWOT

Weakness & Threats: Corporate governanceAdditional reporting and compliance burden Loss of autonomy – answering to a boardHR & IR responsibilities expandedAdministration concentrated, however becoming a target for audit eg. Work-cover & ATORetail bank support … initially

SUMMARY

To collaborate or corporatise ….DO BOTH

Collaborate: giving operational efficiency and capacity.

Corporatise: giving continuity and control.

WHAT DOESN’T KILL YOU MAKES YOU STRONGER!

“Uloola” Binya – September 2007

WHAT DOESN’T KILL YOU MAKES YOU STRONGER!

“Uloola” Binya – March 2012